Arab Finance: Egypt’s non-oil private sector businesses saw a sharp plunge in October, hitting a five-month low amid the persistent inflationary pressures, according to the S&P Global Egypt Purchasing Managers’ Index™ (PMI) survey posted on November 5th.

The headline seasonally adjusted S&P Global Egypt PMI declined to 47.9 in October from 48.7 in September, indicating a slight downturn in the non-oil private sector, the data showed.

At the beginning of the fourth quarter, new order intakes continued to decline as survey participants pointed out persistent challenges to demand, including growing costs, weakening currencies, and supply issues.

The report added that the overall rate of decline was nevertheless far slower than what was observed at the beginning of the year, even though about twice as many businesses saw a decrease in new work over the course of the month as those that saw an increase.

The only sub-component to positively impact the PMI in October was output, which showed a slower but still significant contraction.

In addition to declining sales, survey panelists said that ongoing shortages of necessary materials and pressure from prices caused them to scale back operations.

The manufacturing, construction, and wholesale and retail sectors were the areas of weakness, while the services sector defied the trend and showed a small expansion.

Also, companies had to make layoffs and leave positions unfilled as a result of the faster decline in sales. Despite being slight, the employment decline was the fastest since February, the report added.

“While cost pressures are still sharp, they have moderated somewhat over the course of 2023, providing some respite to firms. With this in mind, business confidence picked up in October to the highest level in the year-to-date, implying some optimism that output could improve over the coming 12 months," Senior Economist at S&P Global Market Intelligence David Owen said.

In a similar vein, companies reported slightly lower inventory levels for the first time in three months, having previously built-up stockpiles due to concerns about growing input costs.

A significant decline in new purchases was also observed in response to import difficulties.

On the plus side, backlogs of work increased to a much lesser extent in October. It has now increased for four months in a row.

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