Sun, 05 Dec 2021 - 01:51 GMT
Sun, 05 Dec 2021 - 01:51 GMT
CAIRO – 5 December 2021: IHS Markit Egypt Purchasing Managers’ IndexTM (PMI) remained unchanged at 48.7 in November, marking the 12th month in row below the 50 neutral mark.
According to the data, a sharp rise in business costs continued to drive higher selling prices and lower demand across the Egyptian non-oil economy during November. New business fell at the quickest pace for six months, leading to a decrease in output as well as renewed cuts in employment and purchasing. Subsequently, expectations for future output fell to their weakest in a year.
It added that the decline in business conditions was led by a reduction in output levels in November. Activity fell for the third month in a row, with the rate of contraction largely similar to that seen in October. Panellists mentioned that a loss of client demand and slowdowns due to global supply chain issues were often behind the downturn.
“New order volumes also fell for the third consecutive month, with the rate of decline accelerating to the fastest since May. Companies noted that higher selling prices often deterred customer spending in the domestic market. Conversely, new export business rose for the first time since August,” it noted.
"Inflationary pressures and supply shortages were again the most prominent depressors of Egypt's non-oil economy in November. Output was down for the third month in a row, matched by a third consecutive decline in new business as higher selling prices deterred client spending in the domestic economy,” Economist at IHS Markit, David Owen, stated.
Owen added that increased shipping and energy prices continued to burden firms with rising input costs, leaving them to fight for profit margins through a sharp increase in charges. Whilst easing from October, the rate of output price inflation was the second-quickest since mid-2018, providing more ominous signs about the trajectory of consumer prices."
PMI showed that selling charges were raised sharply midway through the fourth quarter, with the rate of inflation dipping only slightly from October's 38-month high. As raw material costs continued to surge, some firms highlighted price mark-ups of over 10 percent in order to protect their profit margins.
Input cost inflation was similarly marked, and the second fastest in over three years. Firms indicated that higher fuel and shipping costs often led to increased prices, including for raw items such as foodstuff and paper, it noted.
“Salary costs meanwhile rose for the third month running as companies raised wages in response to an uptick in living expenses. With inflationary effects depressing sales, companies resorted to a renewed cut in purchasing activity in November. Input buying fell for the first time in four months, contributing to a further depletion in stocks of purchased items. Global supply problems meanwhile led to a deterioration in vendor performance for the first time since June,” it added.
It stated that employment numbers started to fall midway through the fourth quarter, after four successive monthly increases in staffing. Panellists noted that the sustained fall in new orders had reduced workloads and led them to leave vacant job positions open. With staff capacity down, backlogs of work increased at the fastest rate since November 2020.
It concluded that higher inflation expectations led firms to predict a subdued improvement in activity over the upcoming year. The overall degree of sentiment fell for the second month running to its lowest level in 12 months,