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Business conditions in Egypt’s non-oil private sector economy deteriorated in January amid weaker demand and inflationary pressures, according to a business survey.
The seasonally adjusted IHS Markit Egypt Purchasing Managers’ Index (PMI), which provides a snapshot of business conditions in the private sector, slipped from 49 in December to 47.9 in January, the lowest reading since April 2021.
The most affected are businesses in the construction and wholesale and retail sectors, where output fell sharply. Employment data in Egypt also fell for the third month in a row, as lower demand resulted in stable backlogs and lower workloads.
“Egypt’s non-oil economy had a disappointing start to the year, as weak demand conditions led to stronger declines in output and new business,” David Owen, economist at IHS Markit, said.
“The drop-off in sales volumes was the joint-quickest since June 2020, driven by marked contractions in the construction and wholesale and retail sectors. The passing on of higher input costs also contributed to the latest fall in demand.”
Some businesses polled for the PMI blamed high prices for goods and services for lower sales, while others complained of pandemic-related supply issues. High shipping costs also made it difficult for some businesses to obtain stocks from vendors.
However, the outlook for future business activity picked up for the second straight month, as overall sentiment continued to rebound from its fall to 12-month low in November.
“More positively, firms remained largely confident that they would weather the current economic storm and see activity increase over the next 12 months. The degree of optimism picked up but remained lower than those seen through much of 2021,” Owen said.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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