Business activity rebounds in August

Business activity in Egypt expanded at the fastest rate in 2015 during the month of August, according to a survey of the country’s non-oil private sector.

Egypt’s Purchasing Manager’s Index score rose to 51.2 in August, up from 49.2 in July. A score above 50 indicates an improvement in business conditions, according to a survey of around 450 businesses.

The reading was the highest in eight months, and the second time this year the index moved in a positive direction.

“The  improvement  in  the  August  survey  is  encouraging,  and  more  than  reverses  the  decline seen  in  the  previous  month,” said Jean Paul  Pigat,  senior  economist  at survey-sponsor Emirates NBD, in a statement.

However, the survey findings are “consistent with only modest growth of the sector overall,” the firm noted.

New business and increased outputs were the key drivers of improvement, the survey found. Purchasing activity by firms also rose in August.

By contrast, export business fell during the month, and employment levels declined for the third month in a row. Companies participating in the survey also noted an increase in input costs and a sharp rate of inflation due to a rise in purchase prices.

“With  export  activity  softening,  domestic  demand  is  likely  to  be  the  main  driver  of growth in the near term,” Pigat said.

Driven by large infrastrucure projects, Egypt’s economy grew robustly in the first half of the 2014/15 fiscal year, with the GDP growing by 5.6 percent. Growth slowed in the second half of the year, which ended in June 2015, and is expected to stand at 3 percent when final calculations are made. 

Official figures are not yet available for the current fiscal year, but July’s PMI score of 49.2, indicating an ongoing deterioration in business conditions. August’s figures indicate that the economy could begin to rebound in the second quarter.