Egypt private economic activity index retreats from July high -PMI

CAIRO, Sept 3 (Reuters)A contraction in Egypt’s non-oil private sector gathered speed in August after having slowed in July, an indication that Egypt is not entirely back on track after a months-long coronavirus slowdown, a survey showed on Thursday.

IHS Markit’s Purchasing Managers’ Index (PMI) came in at 49.4, down from 49.6 in July, still only marginally below the 50.0 threshold that separates growth from contraction. The July reading was Egypt’s best in a year.

Output and new orders increased in August, building on a recovery in July, with businesses seeing “a pick up in new orders and contract requests, although the rate of expansion was mild and softer than in the previous month,” IHS Markit said.

“Notably, some firms commented that sales remained weak as demand was slow to return to pre-COVID levels, suggesting that momentum toward an economic recovery was subdued.”

Output grew for a second month in August but weakened to 50.5 from July’s 50.9. Prior to that, output had been contracting for an entire year. New orders registered 51.2, down from July’s 51.4, its highest reading since November 2017.

The tourism industry, which accounts for about 5% of the economy, remains weak, even after the government reopened Egypt to international flights at the end of June following a three-month closure due to the coronavirus. It also allowed cafes, restaurants and major tourist sites to resume operations.

Private non-oil activity, which has weakened every month since July 2019, registered its worst showing ever in April, at 29.7, after the pandemic hit in full force in mid-March.

Employment fell in August, dragging the headline PMI index down with it. The employment index slid to 45.9 From 46.1 In July, marking its tenth monthly contraction.

“Consumer demand remains weak, with new business picking up at only tentative rates in both July and August,” said IHS Market economist David Owen. “As a result, employment levels were not sustained, with firms reporting a strong cut to workforce numbers.”

(Reporting by Patrick Werr; Editing by Hugh Lawson)

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