Egypt’s non-oil private sector activity slightly improves in April in comparison to March, but remains in contraction territory, according to S&P Global Egypt Purchasing Managers’ Index (PMI).
The headline seasonally adjusted PMI – a composite gauge designed to give a single-figure snapshot of operating conditions in the non-oil private sector economy – posted at 46.9 in April, up slightly from 46.5 in March. The April figures also remain far below the 50 threshold that separates growth from contraction.
The index signalled a solid deterioration in business conditions that was the second-fastest since June 2020.
“Whilst easing fractionally from March, the downturn was still the second-quickest in just under two years as firms often reported making cut-backs due to rising input costs,” according to the PMI report.
The report mentioned that the business conditions in Egypt’s non-oil economy remained under strain from inflationary pressures, supply problems and geopolitical tensions in April.
The latest PMI survey data pointed to a further marked decline in private sector business activity, driven by a sharp drop-off in client demand and rising input costs. As a result, businesses continued to reduce their purchasing activity whilst also cutting employment numbers at the fastest rate in exactly one year. Despite improving from a survey-record low in March, business confidence was again downbeat as firms expect price pressures to remain severe.
David Owen, Economist at S&P Global, said, “Non-oil business activity in Egypt continued to fall sharply in April as businesses faced a further increase in material and energy costs due to the war in Ukraine and a devaluation of the pound in late-March. New orders were also hit as customers reined in their spending, leading to a reduction in employment that was the most marked in exactly one year.”
He added that manufacturers remained the most exposed to these setbacks, with increased raw material prices and supply shortfalls leading to a solid cut in goods production, although wholesale and retail and services also saw a drop in activity. Construction was the only bright spot as PMI data suggested that activity and new work had increased for the first time in 2022 so far.
“The continuation of the war in Ukraine meant that firms expect further price and supply challenges, resulting in another relatively downbeat outlook for business activity. The gap between input prices and output prices also signalled that firms are taking on a large part of the cost burden and delaying price rises until the demand situation has recovered,” he concluded.