Private-sector activity in contraction again in March: The contraction in Egypt’s non-oil private sector deepened in March as the depreciation of the EGP, high inflation, and import restrictions continued to weigh on demand, according to S&P Global’s purchasing managers’ index (pdf). The PMI reading inched down to 46.7 from 46.9 in February, making March the 28th consecutive month that private-sector activity has been in contraction.

Remember: Anything below the 50.0 mark indicates contraction.

What they said: “The headline PMI signaled a further solid deterioration in the performance of non-oil companies, driven by steep falls in activity and new business volumes,” said David Owen, senior economist at S&P Global Market Intelligence. “Inventories and employment levels also decreased, with purchasing once again impacted by customs restrictions.”

Businesses continued to feel the impact of soaring prices, which resulted in a “sharp” fall in new orders, S&P Global said. Falling demand accelerated from February though this was partially offset by a milder decline in export sales. Headline inflation hit a five-and-a-half-year high of 31.9% in February, while food prices and core inflation both rose at their fastest rates ever. Import controls were also cited as being a key cause for weaker demand, and resulted in a fifth consecutive monthly decline in vendor performance

Light at the end of the tunnel? The rate of inflation faced by businesses was “much softer” than at the beginning of the year, and companies raised their prices by the lowest amount in five months as they looked to reinvigorate demand, Owen said. “In addition to a slightly stabler currency market, the data provides some hope that the peak of inflation could be near,” he added.

Manufacturing, construction + retail hard hit: The manufacturing, construction, and wholesale and retail industries experienced further heavy falls in output and demand during the month.

But the services sector sees growth: Activity in the services sector rose for the time since August 2021 as sales picked up.

More job losses: Companies reduced their headcount for the fourth month in a row, often leaving positions vacant due to a lack of new work, S&P Global said.

Businesses are slightly less pessimistic than they were last month: Sentiment remained near series lows despite picking up slightly to its highest level in three months.

The reading got coverage overseas:Reuters.

FROM THE REGION-

The Saudi non-oil private sector is still in rapid expansion despite pulling back from February’s near eight-year high: Saudi Arabia’s PMI (pdf) dipped to 58.7 in March from 59.8 in February. Growth came on the back of a strong demand from foreign customers and increased development spending.

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