Egypt’s non-oil private sector continues downturn in April despite eased inflation: PMI
Updated 5/8/2024 7:20:00 AM
Arab Finance: Egypt's non-oil private sector sustained its downturn through April, as indicated by the S&P Global Purchasing Managers’ Index™ (PMI) survey data.
The survey revealed a continuation of the decline in business activity, resulting in a renewed drop in employment.
The headline PMI registered 47.4 in April, indicating a contraction below the sub-50 level for the 41st consecutive month. Although slightly lower than March's reading of 47.6, this figure underscores the persisting challenges facing Egypt's non-oil private sector.
Recent policy measures, particularly those enhancing currency availability, contributed to a significant cooling in the rate of cost inflation, marking the lowest level in over three years. However, despite this, average prices charged by businesses rose only marginally during the month.
Both business activity and new orders continued to decline, constrained by weak demand, high prices, and volatile exchange rates. Employment also saw a decline for the third time in four months, albeit only marginally, reflecting varying hiring trends across different sub-sectors.
"The past couple of months have seen some major policy shifts, and while we have not yet seen much of an effect on the activity side of things, there has been a material impact on price pressures facing firms," Economics Associate Director at S&P Global Market Intelligence Phil Smith stated.
In response to subdued demand and cost pressures, firms exhibited caution in purchasing activity, raising stocks of purchases marginally. Supply disruptions persisted but eased slightly for the second consecutive month.
Despite these challenges, April's survey noted a significant easing in inflationary pressures, largely attributed to recent policy interventions improving foreign currency availability. This led to a notable slowdown in input cost inflation, with firms adjusting staff pay at the slowest rate in three months.
Furthermore, the survey showed significant confidence among non-oil firms regarding the year-ahead outlook for activity, with sentiment at a six-month high.
This optimism stems from expectations of exchange rate stability, lower prices, and improved material availability, though it remains subdued compared to historical standards.
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