Egypt's non-oil sector declines due to supply chain challenges and inflation

CAIRO - 2 October 2023: In September, Egypt's non-oil sector witnessed a decline as companies struggled with supply chain difficulties and rapid inflation, according to the latest survey data from S&P Global. The S&P Global Egypt Purchasing Managers' Index (PMI) revealed a decrease from 49.2 in August to 48.7 in September.

Senior Economist at S&P Global Market Intelligence, David Owen, highlighted the unprecedented pressure on Egyptian non-oil firms' operating capacity. Despite a continuous decline in sales, companies faced a record accumulation of incomplete orders, as indicated by the PMI Backlogs of Work Index. The high levels of inflation, with urban inflation reaching a record 37.4 percent in August, coupled with a scarcity of raw materials, frequently hindered the fulfillment of client orders.

The September reading of 48.7 marked the lowest point since May, although it remained above the series average. The robust employment reading signaled that companies were willing to increase their staff numbers. Furthermore, new orders, while declining at a faster rate, only experienced a modest decrease.

Additionally, the PMI report disclosed that firms expanded employment levels for the second consecutive month, experiencing the fastest pace of growth in over five years. This rise predominantly occurred in the services sector and stemmed from a desire for bolstered workforces.

The struggles faced by Egypt's non-oil sector highlight the challenges posed by supply chain disruptions and escalating inflation. These factors have significantly impacted companies' ability to meet customer demands and maintain stable operating conditions. The situation calls for strategic measures and proactive solutions to address the growing concerns within the sector.