Cairo – Mubasher: Egypt’s headline seasonally adjusted Purchasing Managers’ Index (PMI) recorded a further decline in operating conditions at the start of 2024, according to the latest S&P Global PMI data.
The PMI declined to 48.1 in January 2024 from 48.5 in December 2023, reflecting a modest deterioration in the health of the sector.
Sales volumes continued to fall amid rising price pressures, marking the fastest drop in new orders since May 2023.
The rate of selling price inflation jumped to the fastest in a year as firms looked to pass on greater input prices. This caused a weakening of order books and contractions in output and purchasing.
In addition to price pressures, some firms underlined that escalating geopolitical conflict negatively affected tourism activity.
The survey also highlighted a pick-up in inflationary pressures at the beginning of the year. Both input costs and output charges rose at their sharpest rates in 12 months, driven by an accelerated increase in purchasing costs.
Meanwhile, the employment numbers across the non-oil economy were widely unchanged at the start of the year, compared to a slight uplift in the previous period.
Lower new orders led to a reduction in staffing, which was generally offset by the filling of vacancies. However, staff costs continued to grow as panellists registered further pressure from the rising cost of living.
The slump in new business led to increased concerns among survey panellists that weak economic conditions will continue in 2024.
David Owen, Senior Economist at S&P Global Market Intelligence, commented: "The drop was partly due to a faster decline in order book volumes, which in turn are still being impacted by inflationary pressures.”
“Input cost inflation picked up to a 12-month high, driving a sharp and accelerated increase in output prices,” Owen continued.
He said: "In addition, some firms signalled that the Israel-Gaza conflict and associated geopolitical tensions had a negative impact on tourism activity, which could lead to further headwinds for the non-oil economy over the next few months.”
