Cairo – Mubasher: Rapid inflation continued to hamper the Egyptian non-oil economy at the end of 2022, as businesses reported further declines in output and new business. However, the two metrics recorded softer falls when compared to a month earlier, while cost inflation also slowed from November's over four-year high.
Whilst output expectations improved to the highest since June, they still reflected a subdued level of sentiment towards the economic outlook. With this in mind, firms reduced their staffing levels for the second time in three months and cut input purchases rapidly amid ongoing supply constraints.
The headline seasonally adjusted S&P Global Egypt Purchasing Managers’ Index (PMI) recovered to 47.20 in December from 45.40 in November. The index signalled a solid deterioration in the health of the non-oil sector, albeit one that was less marked than in November.
David Owen, Economist at S&P Global Market Intelligence, said: "The pound's depreciation against the US dollar in recent months continued to drive input costs higher, although the latest data signalled a softer rate of inflation than November's over four-year record. Nonetheless, with last month's data indicating that firms had shouldered most of the cost burden, output prices continued to rise at a rapid pace at the end of the year as firms passed a greater proportion of their expenses onto clients."
He added, "Cost concerns led firms to reduce their headcounts and deplete input inventories in December, leading to an additional rise in backlogs of work. On a positive note, hopes that inflation will be tamed in 2023 through interest rate hikes and the subsequent slowing of demand meant that firms were more optimistic for activity in the year-ahead, with sentiment climbing higher from October's record low."
