Egypt’s non-oil activity declines to 47.9 in October: S&P PMI Report

CAIRO - 5 November 2023: The latest data from the S&P Global Egypt Purchasing Managers' Index (PMI) reveals a decline in non-oil activity, falling from 48.7 in September to 47.9 in October. The PMI report attributes this contraction to inflation, supply-side challenges, and currency weakness.

Despite the downturn, the report highlights that the rate of decline is much softer compared to the beginning of the year. In fact, the PMI remained above the readings recorded earlier in the year when inflationary pressures on companies were even more severe.

While cost pressures continue to be significant, they have moderated to some extent throughout 2023. In line with this, business confidence picked up in October, reaching its highest level year-to-date. This suggests a degree of optimism that output could improve over the next 12 months, according to David Owen, Senior Economist at S&P Global Market Intelligence.

The rate of overall input price inflation has also moderated slightly for the second consecutive month. On the other hand, the output subindex climbed to 46.4 in October from 45.7 in September.

Additionally, the subindex for future output expectations rose to 56.4, marking its highest level in 10 months, compared to 53.0 in September.

Despite the challenging environment, there are some positive signs. Backlogs of work increased at a slower pace in October, and the work-in-hand also saw its fourth consecutive month of growth. However, the subindex for new orders declined to 47.1 from 47.6, while the backlog index slipped to 50.6 from 53.1.

Moreover, the PMI reveals an improvement in expectations for the year-ahead outlook. In October, firms expressed moderate hope for a recovery in economic conditions, with 13% of respondents predicting growth over the next 12 months, according to the report.