Cairo – Mubasher: Business conditions in Egypt's non-oil economy remained under strain from inflationary pressures, energy rationing, import restrictions, and weak demand at the end of the third quarter (Q3) of 2022.
The headline seasonally adjusted S&P Global Egypt Purchasing Managers’ Index™ (PMI™) in September remained unchanged from August at 47.6, signalling a solid deterioration in business conditions.
The data indicated further marked drops in private sector business activity, driven by a sharp drop-off in client demand, coupled with high prices and growing uncertainty.
Economist at S&P Global Market Intelligence, Shreeya Patel, said: "Non-oil activity in Egypt continued to suffer from weak demand, geopolitical tensions and surging inflation in the final month of the third quarter. The energy crisis - brought about by Russia's war on Ukraine - led to sharp uplifts in energy costs and the introduction of energy rationing policies. At the same time, unfavourable pound dollar exchange rate movements added to already steep price pressures.”
Meanwhile, new orders fell solidly last month and companies indicated that high prices and client hesitancy curtailed demand. Moreover, exports fell for the second month in a row, but at the steepest rate for over two years.
Cost pressures largely arose from rising energy, material, and wage expenses in September. Firms responded to higher costs by increasing their selling prices. Moreover, the rate of inflation was sharp and quicker than the long-run series average.
Vendor performance deteriorated once again with lead times now lengthening in each month since November 2021. Firms linked delays to restrictions at ports and material shortages.
As regards the employment side, headcounts rose marginally for the third month in a row and backlogs rose fractionally.
Patel added: "Firms nevertheless remain hopeful that macroeconomic conditions would improve in the medium-term, but for now, non-oil Egyptian businesses are challenged to operate in an environment which includes persistently high prices, weak demand and growing uncertainty."
