The pace of decline in the operating conditions of Egypt's non-oil businesses softened in April due to a slower fall in demand and easing inflationary pressures, a business survey revealed on Monday. 

According to the latest Purchasing Managers’ Index (PMI) survey data, import controls and high prices overall continued to weigh on inventories, while sustained economic weakness led to the most downbeat outlook in the survey's history.

S&P Global Egypt PMI was posted at 47.3 in April. The index rose from 46.7 in March to its highest since October last year, signalling that business conditions declined to a lesser extent.

The PMI survey pointed towards notable contractions in activity and sales across the non-oil economy. The respondents of the survey cited weak client demand linked to high inflation for dampening sales.

David Owen, Senior Economist at S&P Global Market Intelligence, said: "The latest PMI figures for Egypt provided some promising hints for the direction of the non-oil economy, particularly on inflation. Relative calmness in currency markets led to reduced pressure on import prices, culminating in the softest rise in purchase costs for a year and one that was weaker than the trend rate."

"The slowdown encouraged firms to raise their own charges to a lesser extent, which helped to partly alleviate the downturn in sales. Indeed, new orders fell at the softest pace for four months, although still markedly overall," he added.

Restrictions on imported goods were also still cited by companies as an inhibitor to capacity levels.

While the construction industry marked growth for the first time in ten months, manufacturing, wholesale & retail and services recorded declines in output and new work.

Businesses noted that the path for future activity was still highly uncertain due to weak demand both domestically and abroad, and high price levels.

The firms ‘output expectations for the year ahead fell to their weakest on record in April, the survey said. 

(Writing by Seban Scaria; editing by Daniel Luiz)

(seban.scaria@lseg.com)