Egypt’s PMI for non-oil activities faces fastest drop in activity in two years – Markets & Companies – Business

This is the second time the PMI has risen in 2022, with the index hitting 48.1 in February.

In its Egypt report, S&P said Egypt’s PMI was still below the neutral 50 threshold, indicating a solid deterioration in trading conditions that was the second fastest since June 2020.

The sector also saw a notable decline in new orders in April as customer demand waned under pressure from rising costs of living and selling expenses.

Meanwhile, new business fell in April for the eighth consecutive month due to weak domestic demand and a drop in new export sales, the report said.

In April, the Ministry of Trade and Industry said Egypt’s non-oil exports increased by $1.5 billion (20%) in the first quarter (Q1) of 2022 (Jan-March) for reach $9.1 billion, compared to $7.6 billion in 1Q 2021. despite the current global economic challenges.

“Reduced demand pressures meant that many companies had some spare capacity in April, as indicated by a slight decrease in backlogs. Subsequently, some companies reported leaving vacancies unfilled. , leading to the fastest decline in employment levels seen in exactly one year,” the report explains.

“Despite the acceleration in business costs, Egyptian business selling prices rose only slightly in April. In fact, the increase was the smallest seen since July 2021, as businesses chose to absorb much of the cost burden rather than pass it on to their customers,” he added.

The report further indicates that business conditions in Egypt’s non-oil economy remained under pressure from the inflationary wave, supply problems and geopolitical tensions in April.

According to the latest data from the PMI survey, the decline in private sector business activity in April was fueled by a sharp drop in customer demand and higher input costs, both of which led to a reduction of business purchasing activity as well as a reduction in the number of jobs. at the fastest pace in a year.

“Despite improving from a record low in March, business confidence is on the decline again as companies expect pricing pressures to remain severe,” the report said.

David Owen – an economist at S&P Global – said non-oil business activity in Egypt continued to fall sharply in April as companies faced a further rise in materials and energy costs due to the Ukraine- Russian currency and a devaluation of the Egyptian pound. end of March.

“Manufacturers remained the most exposed to these setbacks, with rising commodity prices and supply shortages leading to a sharp reduction in the production of goods, although wholesale, retail and service trade also suffered. a drop in activity. Construction was the only bright spot, as PMI data suggested that activity and new work had increased for the first time in 2022 so far,” Owen explained.

He added that the continuation of the war in Ukraine meant that non-oil private sector companies expected further pricing and supply challenges, causing a further negative outlook for business activity in the country.

“The gap between input prices and output prices also indicates that companies are bearing much of the cost burden and delaying price increases until the demand situation has improved,” he said. he added.

The Central Agency for Public Mobilization and Statistics (CAPMAS) is expected to announce April inflation figures on Tuesday.

The latest CAPMAS figures showed that Egypt’s headline annual inflation in urban areas accelerated to 10.5% in March from 8.8% in February, fueled by rising food prices and energy during the war in Ukraine.

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