Egypt's non-oil private sector contraction slows in May, PMI shows
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A view of the city skyline and River Nile from Cairo Tower building in the capital of Cairo, Egypt December 5, 2019. REUTERS/Amr Abdallah Dalsh/File Photo
CAIRO (Reuters) - Activity in Egypt's non-oil private sector edged closer to stability in May, with softer contractions in new business and output, according to an S&P Global survey released on Tuesday.
The headline seasonally adjusted S&P Global Egypt Purchasing Managers' Index (PMI) rose to 49.5 from 48.5 in April, remaining below the 50.0 threshold that separates growth from contraction.
Output and new orders continued to decline, but at a slower pace compared to April, as fewer companies reported cutbacks in customer sales. However, businesses reduced purchasing activity at the fastest rate in seven months and trimmed their workforces, with employment dropping for the fourth month in a row.
The output sub-index strengthened to 49.5 from 47.4 in April, while the new orders subindex rose to 49.1 from 47.4.
Input price inflation increased sharply, driven by rising supplier charges and volatile exchange rates. This led to a fresh rise in selling prices as firms passed on some of the cost increases to customers.
"Although many of the key PMI metrics continued to indicate a deterioration in business conditions in May, the overall pace of decline was not as sharp as in April and softer than the survey's historical trend," said S&P Global Market Intelligence economist David Owen.
"Output and new orders fell at the slowest rates for three months, helped by renewed growth in the manufacturing sector."
Non-oil businesses in Egypt remained cautious about the future, with optimism slightly improved from April but still weak by historical standards. Concerns over stubborn price pressures and low demand continued to weigh on output expectations, S&P Global said.
The future output index improved to 53.0 from 52.7 in April.
(Reporting by Patrick Werr; Editing by Toby Chopra)
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