Non-oil business activity in Egypt witnessed another drop in operating conditions in January, a survey showed on Monday, as sales volumes continued to fall amid rising price pressures.
The seasonally adjusted S&P Global Egypt’s Purchasing Managers’ Index (PMI) slightly fell to 48.1 in January from 48.5 in December, but remained below the 50.0 mark, signalling a modest deterioration in the health of the sector.
The ongoing decline coincided with solid contractions in output and new orders during January, amid evidence that high prices had continued to weaken client demand, the survey added. The fall in new work intakes was the sharpest recorded in eight months, with weakness reported across each of the broad sectors monitored by the survey. Besides price pressures, some firms noted that increased geopolitical conflict had a negative impact on tourism activity.
The latest data signalled a pick-up in inflationary pressures at the beginning of the year, it noted. Both input costs and output charges surged at their sharpest rates in 12 months, driven by a marked and accelerated increase in purchasing costs.
“The drop was partly due to a faster decline in order book volumes, which in turn are still being impacted by inflationary pressures. Input cost inflation picked up to a 12-month high, driving a sharp and accelerated increase in output prices.” David Owen, senior economist at S&P Global Market Intelligence, said.
Gaza war, associated geopolitical tensions
The ongoing Israeli war in Gaza and associated geopolitical tensions had “a negative impact” on tourism activity, Owen added, which could lead to “further headwinds for the non-oil economy over the next few months.”
Egyptian non-oil businesses also reduced their purchasing activity in January, although this trend moved closer to stabilisation as firms showed further signs of keeping stock levels stable, the survey stated. Similarly, Supply chains showed additional signs of stability, as vendor lead times lengthened only slightly from December. Employment numbers across the non-oil economy were broadly unchanged at the start of the year, following a slight uplift in the previous survey period.
