S&P gives slight bump to Egypt’s PMI for final month of 2023 to 48.5

Cairo – January 4, 2024: Egypt’s S&P Global Purchasing Managers' Index (PMI) closed the year at 48.5, a slight uptick from November’s 48.4, citing the continued contraction to import constraints, slowed demand, and the weakened Egyptian pound.

According to S&P, the latest data displays a modest deterioration that was softer than the average seen over the past year (47.9). Egypt received its highest index rating of 49.2 in July, breaking its previous record from August 2021.

David Owen, Senior Economist at S&P Global Market Intelligence, explained that “inflationary pressures are still widely driven by the economic challenges originating from the Russia-Ukraine war, including a marked depreciation of the pound against the US dollar leading to an uplift in buying costs”.

Non-oil businesses reported higher confidence rates from the record-low in November despite activity shrinking for the 37th month - an index of below 50 is considered a contraction - to hit 55.1 from November's 50.9, the second-best recording in 2023.

S&P explained that supported by improved business projections due to an expected easing of economic challenges and a rise in activity, renewed growth in the labor market was recorded for the first time in three months.

Increased employment numbers prompted S&P to raise the PMI at the end of the year, with non-oil companies hiring for the first time in three months, partially a reaction to growing business in the past 5 months and to maintain backlogs of work during the final month of the year.  

Future output expectations reported a modest recovery from November's record low, with output cut in December to 46.7 from 47.2 as climbing prices affected demand, however, “the reduction was one of the slowest seen in the past two years.”

New order volumes decreased at the sharpest rate since May, driven by the foreign currency shortage and high inflation. The subindex for new orders slid to 46.9 from 47.3 in November, with the wholesale and retail sectors being hit the most.

Egypt's headline inflation slowed to an annual 34.6 percent in November but remained near September's all-time high of 38.0 percent, according to CAPMAS.