Cairo – Mubasher: The headline seasonally adjusted S&P Global Egypt Purchasing Managers’ Index (PMI) inched up to 47.70 in October 2022, from 47.60 in September, stretching the current sequence of deterioration to just under two years.
Business optimism among non-oil firms slid to its lowest in over a decade of survey data in October, with only 4% of firms giving a positive outlook for the next 12 months, according to a recent press release.
New business and activity dropped to higher prices, supply problems, and weak global demand.
The fall in PMI was accompanied by a sustained decrease in new business inflows. Firms suffering a decline in new orders often highlighted rapid inflationary pressures and a subsequent fall in client spending. Hence, the overall activity decreased at a sharp pace in October, with the downturn broadly spread across the whole of the non-oil economy.
David Owen, Economist at S&P Global Market Intelligence, said: "Egypt remains heavily impacted by the war in Ukraine, particularly in the tourism sector, as well as industries constricted by the government's import ban in place since March in a bid to conserve US dollar reserves. Several businesses reported that import restrictions had pushed material prices even higher, adding to upticks in energy and food commodity prices recorded since the war began.”
He continued: “However, survey data suggests that only a proportion of cost rises are being passed through to consumers - only 5% of respondents raised their charges in October, compared to 24% that saw a concurrent rise in costs - suggesting that many firms are being forced to shoulder the burden of higher expenses as the demand outlook weakens.”
Furthermore, survey data indicated a first improvement in suppliers' delivery times for exactly a year, supporting a fresh uptick in stocks of purchases. With output expectations hitting a record low, non-oil firms marginally reduced their staffing numbers for the first time since June, with some companies citing layoffs due to deteriorating sales.
