{"id":609478,"date":"2023-11-06T00:00:00","date_gmt":"2023-11-06T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2023\/11\/06\/pmi-contracts-at-sharpest-rate-in-five-months\/"},"modified":"2023-11-06T00:00:00","modified_gmt":"2023-11-06T00:00:00","slug":"pmi-contracts-at-sharpest-rate-in-five-months","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2023\/11\/06\/pmi-contracts-at-sharpest-rate-in-five-months\/","title":{"rendered":"PMI contracts at sharpest rate in five months"},"content":{"rendered":"

The contra<\/strong>ction in our non-oil private sector deepened in October <\/strong>as rising prices tamped down demand and output fell thanks to the ongoing shortage of FX, according to S&P Global\u2019s latest <\/span>PMI index (<\/a>pdf<\/a>)<\/a> out yesterday. The index posted its \u201csharpest deterioration\u201d in five months to reach 47.9 in October, down from <\/span>48.7 in September<\/a>.<\/span><\/p>\n

The gauge has been in contraction territory for nearly three years:<\/strong> Non-oil private sector activity has now remained below the 50.0 threshold that separates growth from contraction for 35 consecutive months.<\/p>\n

Soaring inflation + raw material shortages = falling output: <\/strong>Production registered \u201ca slower but still solid contraction\u201d as falling sales, sustained material shortages, and price pressures drove down production in the manufacturing, construction, wholesale, and retail sectors, while the services sector recorded modest growth.<\/p>\n

PMI participants made \u201ctheir fire reductions in staffing \u2026 since July\u201d <\/strong>on the back of a \u201cfaster decline in new business volumes \u2026 supply shortages, and inflation, said David Owen, senior economist at S&P Global Market Intelligence. The rate of layoffs was the fastest since February on the back of a \u201cquicker drop in sales,\u201d the report said.<\/p>\n

Remember: <\/strong>Inflation hit another all-time high of 38% y-o-y in September<\/a> thanks to surging food costs and the impact of a series of devaluations. Data for October should be released on Thursday, 9 November.<\/p>\n

Cost pressure stabilizing? <\/strong>\u201cWhile cost pressures are still sharp, they have moderated somewhat over the course of 2023, providing some respite to firms,\u201d Owen said. October\u2019s PMI figure is higher than in the first five months of the year and higher than the whole of 2022, bar February and January.<\/p>\n

Optimism, of a sort: <\/strong>On the back of a gradual \u2014 if bumpy \u2014 stabilization of cost pressure, \u201cbusiness confidence picked up in October to the highest level in the year-to-date, implying that output could improve over the coming 12 months,\u201d Owen said. Businesses are \u201cmoderately hopeful of a recovery in economic conditions,\u201d the report said, with 13% of respondents sharing a positive outlook for the coming year.<\/p>\n

The release also received attention internationally:<\/strong>Reuters<\/a>.<\/p>\n

FROM THE REGION- <\/strong><\/p>\n