Daily Economic Update

Egypt: Business activity declines in April. The S&P Global PMI gauge of private sector activity dipped further into contraction territory in April, with a reading of 48.5. This is the second consecutive month of decline, following March’s figure of 49.2 and also the sharpest monthly slowdown since December. Output and new business orders were affected by declines in consumer spending, which some firms linked to lower confidence and higher uncertainty in the context of a deteriorating external macroeconomic environment sparked by President Trump’s trade tariffs. This also had a run-on effect on employment levels, which fell for a third consecutive month, as firms reduced payroll numbers to cut costs amid weaker activity. Surprisingly, however, this loss of confidence appeared limited to the short term since businesses seemed upbeat about prospects a year from now; this mirrors evidence from various PMI surveys across the GCC released yesterday (and today in Qatar – see below), where business sentiment broadly held up. We also note that the survey was conducted between 9-22 April, so will not capture the full impact of the central bank’s 225bps interest rate cut on April 17th. On the price front, April saw output prices steady at the no-change level, which for the first time in four and a half years signaled no inflation in selling prices. Still, input prices – mainly fuel and raw materials – rose at their quickest pace in four months, which along with rising staff costs, imply increased pressures on businesses margins.

Qatar: Non-energy private sector activity cools in April. The non-energy private sector PMI softened to a 3-month low of 50.7 in April, easing from 52.0 in March amid a drop in new orders and signs of easing in the booming labor market. Private sector employment grew at robust levels again last month, though the pace slowed to an 8-month low, with the similarly strong increases in staff costs softening to the slowest since last November. New orders fell during the month, registering the third contraction this year on lower demand from the construction sector. As demand conditions have softened, both retailers and wholesalers continued to engage in discounting policies, with output prices declining for the ninth consecutive month. Nevertheless, output grew month-over-month, recording its first expansion in 2025. Though slightly easing from the prior month, the business sentiment component has remained robust and reflected a few signs of worry about the global economy, with optimism linked to growth in real estate and construction, investment, tourism and government development initiatives.         

Chart 1: Egypt and Qatar PMIs (index, >50=expansion) Source: S&P Global

Chart 2: US ISM services PMI (index, >50=expansion) Source: Haver

US: Services activity strengthens somewhat but price pressures surge. The ISM services PMI surprisingly increased to 51.6 in April from March’s nine-month low of 50.8, suggesting the services sector tentatively holding up well amid ongoing uncertainty about tariffs and other government policies. The improvement was more pronounced in new orders (at 52.3, a four-month high) while the pace of deterioration in employment (49) eased. Importantly, the gauge of prices (at 65.1) jumped to its highest since January 2023, with firms citing building up of actual cost pressures as suppliers looked to raise prices following the imposition of hefty import tariffs. Moreover, tariff-related uncertainty continued to weigh on business confidence and planning given an unclear outlook about future input costs and federal spending cuts. While the headline figures in the survey provide some comfort, erratic tariff policy implementation (as seen in recent months) is still expected to hamper business and economic growth, with the impact likely to become clearer in the coming months.  

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