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Business activity falls back into contraction territory after one month in the green: Egypt’s non-oil private sector activity contracted in September, just one month after expanding for the first time in three years, S&P Global’s most recent Egypt Purchasing Managers Index (PMI) (pdf) report showed. The report pointed to price pressures dampening sales and slowing overall business activity, with output and new orders both declining “at the sharpest rates since April.”
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The September index reading came in at 48.8, below the 50.0 mark that separates growth from contraction and down from 50.4 in August, which was the first time the country’s non-oil private sector had witnessed growth since November 2020. Business activity is now at its lowest since April.
Driving the fall was accelerating cost inflation, which ramped up to a six-month high thanks to “increased raw material costs and currency weakness.” Rising price pressures helped depress demand as accelerating input cost inflation in 3Q 2024 was reflected in the output cost for consumers. This had a “dampening effect on customer orders, leaving them to scale back business activity,” S&P Global Market Intelligence Senior Economist David Owen noted
The pace of decline in new business “accelerated to the quickest in five months,” with respondents reporting a drop in demand from the domestic market. But it wasn’t all bad on the demand front, as new orders from outside the country “strengthened for a fifth straight month.”
It looks like the price pressures stunting demand aren’t going anywhere anytime soon, with Owen noting that continued increases in output charges suggest that “price-related sales reductions may continue.”
On a positive note, firms were hiring more and buying stock, signaling that the private sector is hopeful that growth will return this quarter. Employment increased for the third month in a row and companies brought more stock than in the previous month.
Business sentiment was down, but remained positive: Businesses are still confident about the 12-month period, but the level of confidence was down from August to its lowest in three months.
