CAIRO - 9 May 2024: Egypt's non-oil private sector activity slowed down in April 2024, according to the latest survey data from the S&P Purchasing Managers' Index™ (PMI). The PMI fell to 47.4 from 47.6 in March, indicating a further contraction in business activity at the start of the second quarter.
The survey revealed a significant easing of inflationary pressures in April. This was attributed to recent policy measures aimed at improving the availability of foreign currency. The increased availability of foreign currency, coupled with hopes of exchange rate stability, lower prices, and improved material availability, boosted confidence among non-oil firms regarding the year-ahead outlook for activity.
"The exchange rate liberalization has led to a drop in the formal rate of the pound against the US dollar, but with firms reporting greater availability of foreign currency, we've actually seen a slowdown in purchase cost increases as local FOREX supply-demand imbalances unwind. In turn, average prices charged for goods and services rose much slower in April, which could feed through to lower headline inflation in the coming months," Economics Associate Director at S&P Global Market Intelligence, Phil Smith, said.
Despite the slight easing in the rate of contraction for the second consecutive month, business activity remained below the average recorded since September 2021. Panelists indicated that weak demand conditions, high prices, and volatile exchange rates constrained new orders. New export orders, however, remained broadly unchanged.
Furthermore, firms reduced their purchasing activity in April, in line with the trend observed since the beginning of 2022. Although there were some delays in the delivery of purchases, the disruption to supply eased for the second consecutive month and was only marginal overall. Stocks of purchases were raised, albeit to a small extent.
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