The non-oil private sector’s two-month stint in expansion territory has come to an end, with declining demand and weaker output helping drive the trend, according to S&P Global’s latest Purchasing Managers Index report (pdf). Egypt’s headline figure fell 0.9 percentage points to 49.2 in March, down from 50.1 in February and below the all-important 50.0 mark is the threshold separating contraction from growth. Despite the fall, the reading “remained higher than its long-run trend, suggesting that businesses are still in a good overall position,” S&P Global Senior Economist David Owen said.

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New orders from both local and international sources fell, leading to local companies to trim spending and reduce operations. Companies also reported a decrease in purchasing activity — decreasing for the first time in four months — alongside a reduction in workforce headcounts.

Input prices rose but at their slowest rate in 58 months, which may suggest that the increasing stability of the EGP against the greenback is helping ease inflationary pressures. The country’s private sector responded to the deceleration of input price inflation by raising prices at the lowest level during the quarter at the slowest pace in four years.

Not all sectors had a bad month, with the report highlighting that the construction industry witnessed “robust growth in output and new work,” in contrast to manufacturing and retail.

Businesses are unsure of what lies ahead, with companies’ expected outputs falling to some of the lowest levels reported by the index, which Owen attributes to an unpredictable future ahead for the local economy despite an improved inflation outlook.

Some corners of the international press also took note of the reading: Reuters.

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