Cairo – Mubasher: Egyptian companies suffered a marked contraction in operating conditions during November 2022, as business activity and demand were undermined by inflationary pressures, the latest PMI data showed.

Output fell at the sharpest rate since the initial COVID-19 lockdown in May 2020, as a strong depreciation of the Egyptian pound caused purchase prices to hike at the sharpest pace in over four years. Despite new orders falling rapidly, employment levels expanded for the fourth time in five months, while business confidence recovered slightly from October's series low.

The headline seasonally adjusted S&P Global Egypt Purchasing Managers’ Index (PMI) dropped from 47.70 in October to 45.40 in November, the second lowest since June 2020.

David Owen, Economist at S&P Global Market Intelligence, said: "Purchase price inflation hit a 52-month high, leading 42% of surveyed firms to report a rise in total input costs over the month. Notably, this proportion was three times higher than those registering an increase in their selling prices in November (14%), suggesting that most firms were shouldering the burden of rising costs as demand continues to worsen."

The rate of decline in new orders deepened in November, amid reports of spending cuts at customers due to rapid inflation and elevated interest rates. Like output, new business declined to the greatest degree since May 2020. Export sales also went down amid slowing global economic conditions.

On the purchasing side, rising import costs and falling new orders prompted firms to rapidly cut input buying levels in November. Supplies were also hampered by a renewed lengthening of delivery times.

Looking ahead, Egyptian firms were slightly more optimistic about future output in November, albeit following a series record low in October. Concerns about high inflation, rising interest rates, currency weakness, and a global economic slowdown remained dampeners on sentiment.