On the up, but still in the red: Egypt’s non-oil private sector activity contracted for the second consecutive month in October, S&P Global’s most recent PurchasingManagersIndex (PMI) (pdf) report showed. The decline was driven by rising price pressures — driven by higher costs of raw materials and utilities — that dampened new order volumes across the board.

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By the numbers: October’s index reading rose to 49.0 from the previous month’s 48.8, leaving us just below the 50.0 mark that separates growth from contraction. This marks our second month in the red since August’s reading of 50.4 — the first time our PMI reading had broached the threshold into growth since November 2020.

A stronger USD and high input prices drove the fall: Rising costs of imported inputs drove the trend, according to the report, with a stronger USD highlighted as the main culprit. However, input cost inflation rose at a slower pace than September’s six-month high and at the slowest pace since July — a possible indication that we might soon see the tail-end of input cost inflation.

A drop across the board — with construction taking the biggest hit: Surveyed companies reported overall declining sales due to weak market conditions and higher prices, with construction firms seeing the largest drop in activity and sales.

On a more positive note, hiring was up: Despite the contraction in overall business activity, employment rose for the fourth straight month, with job creation growing at its fastest rate since May. Total input purchases also fell for the first time since August, easing pressures on supply chains.

A positive outlook, with confidence concerns: Non-oil private sector activity is expected to increase in the coming 12 months, with S&P Global Market Intelligence senior economist David Owen noting that “with the PMI at 49.0 points in October, Egypt’s non-oil economy is not too far from growing again.” That being said, businesses are not confident about the year ahead, with the report saying that the relevant index had dropped to “one of its lowest readings in the survey’s history.”

ELSEWHERE IN THE REGION-

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