A general view of clustered buildings in Cairo, Egypt, January 28, 2018. REUTERS/Mohamed Abd El Ghany
CAIRO - 5 March 2022: Egypt’s Purchasing Managers' Index (PMI), issued by the S&P Global Group, recorded 46.9 in February to remain firmly beneath the 50.0 neutral mark.
According to S&P Global data, the index was up from 45.5 in January to signal a softer downturn.
Egypt's non-oil economy remained in a steep downturn in February, latest PMI™ survey data showed, as demand continued to hit by high inflation and supply chain pressures, the data revealed.
It noted that as a result, job numbers fell at the fastest rate in nine months and business confidence was at a near-record low. On the plus side, inflationary pressures softened from January's recent highs.
Senior Economist at S&P Global Market Intelligence, David Owen, said that the latest PMI data for Egypt continued to signal a troubled market in February, but with some relief after a rocky start to the year.
“After hitting a four-and-a-half-year high in January, the rate of purchase price inflation softened to the lowest since October, as firms suffered to a lesser extent from weaker exchange rates and rising import costs,” Owen stated, adding that similarly, output charge inflation was the softest for four months, after posting a near six-year high in the previous month. The findings provide some hope that inflation may start to soften after reaching 25.8% in January.
He pointed out that the downturns in output and new orders were not as severe in February compared to the first month of the year, as higher prices led to a solid, but softer fall in new business intakes. Nonetheless, the sustained fall in demand led businesses to cut employment levels at the fastest rate in nine months, while input buying also decreased sharply.
According to Owen, efforts to streamline capacity coincided with another bleak assessment of future output, with expectations falling for the second month running and posting only just above the record low seen in October last year. Continued demand weakness, persistent inflation and ongoing import controls to restrict FX flows mean that companies are likely to face a prolonged downturn in 2023.
“While initial signs of a pick-up in the global economic landscape may help to bring some stabilization, S&P Global Market Intelligence believes that FX markets are not yet at their equilibrium state and that inflation will likely remain in double-digits this year,” he noted.
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