Egypt’s non-oil business conditions continued to deteriorate in the last month of 2023, although at a slightly slower rate than in the previous month.  

The country’s headline purchasing manager’s index (PMI) reached 48.5, up from 48.4 in November, with anything below 50.0 indicating a decline in business conditions.  

The S&P Global Egypt PMI report showed the average PMI score for the year was 47.9 and attributed the decline in business conditions to slowing demand, which led to sharper falls in activity and new orders. 

Weakness in the Egyptian pound and ongoing supply shortages played a major part in the downturn, as firms subsequently faced both rapid input cost inflation and a pullback in customer spending, the report said.  

Weaker demand trends encouraged companies to contain price hikes, resulting in only a modest increase in selling charges.  

However, non-oil firms raised their staffing numbers for the first time in three months in December, and future output expectations staged a modest recovery from November’s record low.  

David Owen, senior economist at S&P Global Market Intelligence, said: “As highlighted by surveyed firms, inflationary pressures are still widely driven by the economic challenges originating from the Russia-Ukraine war, including a marked depreciation of the pound against the US dollar leading to an uplift in buying costs.” 

He added: “The latest official data showed headline inflation dipping to a six-month low of 34.6% in November, which was still incredibly high but nonetheless offered some positive signs.” 

Owen described firms’ reluctance to raise prices in December as ‘a tricky balance’ between supporting demand or margins.  

“Given the nature of the current inflation wave, relief on this conundrum is only likely to come from an easing of external political and financial headwinds,” he said.  

The main upwards influence on the headline PMI came from employment at the end of 2023, as survey data indicated the first uptick in staffing since September, the report added.  

Businesses took on more workers amid efforts to boost capacity, which was partly a reaction to increases in outstanding business in each of the prior five months.  

Consequently, higher employment helped firms to keep backlogs of work broadly stable in December.  

The degree of optimism was much higher among survey respondents than the series-record low in November, and the second-best in 2023, the report concluded.  

(Writing by Imogen Lillywhite; editing by Brinda Darasha)
(imogen.lillywhite@lseg.com)