Egypt’s non-oil private sector economy strengthened further in August, as new export orders and output continued to grow while the job market expanded at a record rate, according to a new companies’ survey.
The Emirates NBD Egypt Purchasing Managers’ Index rose to 50.5 last month from 50.3 recorded in July, the second consecutive monthly increase registered since September 2015. Readings above the 50-mark indicate growth in the economy and below 50 signal contraction. The index is a composite indicator designed to give an overview of operating conditions in the non-oil private sector economy. The survey is sponsored by Dubai's biggest lender, Emirates NBD, and produced by IHS Market.
Egyptian non-oil private sector is “beginning to see the protracted recovery we had projected would take hold in the new fiscal year,” said Daniel Richards, Middle East and North Africa Economist at Emirates NBD.
In response to greater inflows of new work, firms raised their staffing levels during August, ending a 38-month sequence of job shedding. The rate of employment growth was the most pronounced since the inception of the survey in April 2011.
The latest reading highlighted a further improvement in operating conditions across Egypt’s non-oil private sector. Output stabilised during August, ending a three-month period of contraction.
The reading above 50 was also supported by new orders rising for the second consecutive month in August, with companies reporting greater demand from both domestic and international markets underpinning the latest rise in new business, the survey noted.
However, the expansion was marginal and softened from the preceding month. Although small, the pace of gain in new export orders also quickened from the preceding survey period, it added.
Despite easing from July’s recent high, overall input cost inflation remained sharp in August, driven by rises in both salaries and purchases costs. The latter was the primary factor behind overall cost pressures, with survey respondents commenting on higher fuel, electricity and iron ore prices. In line with the trend for input cost inflation, firms raised their output charges at a sharp, but slower pace than in the previous month.