Egypt’s private sector contracts to the lowest level in two years

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Wednesday, the Purchasing Managers’ Index recorded the worst performance of the non-oil private sector in Egypt in two years.

The sector witnessed a noticeable decline, as the index reached 45.2 points, compared to 47 points in May, moving away from the 50-point level separating growth and contraction.

S&P Global issued a statement attributing the decline to a sharp rise in the prices of goods and services, depreciation of the Egyptian pound, and shortage of raw materials. It said that last month witnessed the fastest rise in production input costs in nearly four years, which led to a noticeable acceleration in the rate of selling price inflation.

The American publicly traded corporation added that this reading is the lowest in Egypt since mid-2020, which witnessed the economic repercussions of the first wave of the Coronavirus pandemic. Core inflation also increased to 13.5% in June, compared to 13.1% in May. The sub-index for production prices increased to 72.0% in June, compared to 62.1% in May, while the purchasing costs index rose to 70.9% compared to 62.3%. Regarding production and new orders, the contraction that has been going on for about a year continued, as the production index fell to 41.3%, from 45% in May, while the new orders index declined from 44.6% to 41.9%.