Cairo – Mubasher: The headline seasonally adjusted Purchasing Managers’ Index (PMI) of Egypt marked a further deterioration in operating conditions after declining to 48.7 in September 2023 from 49.2 last August.
Non-oil firms struggled with supply chain challenges and rapid inflation at the end of the third quarter (Q3) of 2023, according to the latest S&P Global PMI data.
The index marked an unprecedented rise in outstanding work as output levels contracted sharply.
Despite a further downturn in new orders, September witnessed an accumulation of backlogs, as rising prices continued to hit client spending and confidence.
The pressure on operating capacity caused the sharpest increase in backlogs of work ever recorded by the survey since it began in 2011.
Output levels retreated at a sharp rate at the end of Q3, while firms reported difficulties acquiring raw materials due to import challenges and rapid price rises.
Meanwhile, the rate of input cost inflation in the non-oil economy remained sharp in September, slowing only marginally from August's five-month high.
David Owen, Senior Economist at S&P Global Market Intelligence, said: “Firms frequently reported that the high-inflationary environment - annual urban inflation reached a record high of 37.4% in August - and a lack of raw material supply meant they were often unable to fulfill client orders.”
"The weak exchange rate against the US dollar led to another steep rise in purchase prices in September, adding to indications that inflation will remain high until related factors are under control, such as food supply and foreign currency reserves,” Owen added.
He elaborated: “This added to a generally subdued level of confidence towards future activity, as well as another sharp reduction in purchasing levels.”
"However, operating conditions continued to weaken at only a mild overall pace, following recent positive movements in the PMI. The latest reading of 48.7 was the lowest since May, but it was still above the series average," the economist indicated.
