A survey showed, today, Sunday, that the activity of The non-oil private sector in Egypt It contracted in April, extending the 17-month deterioration as the Ukraine crisis exacerbated price increases.
The Purchasing Managers’ Index in Egypt, issued by Standard & Poor’s Global, rose to 46.9 from 46.5 in March, but is still below the 50.0 that separates growth from contraction.
“While the decline was slight from March, it is still the second-fastest decline in just under two years, with companies often reporting cuts due to higher input costs,” S&P Global said.
Higher global food and raw materials prices continued to cause a sharp drop in production and new orders, but at a slightly slower pace, with the input price sub-index rising to 58.3 from 58.6 in March, and the purchasing costs sub-index rising to 58.8 from 59.1.
“Cost pressures have largely stemmed from the increase in energy and raw materials prices due to the war in Ukraine,” Standard & Poor’s Global said.
“Many participants also commented on the recent devaluation of the Egyptian pound. Despite the marginal decline, the overall inflation rate of input prices was strong and remained above the average recorded in 2021,” she added.
The central bank allowed the pound to fall 14% against the dollar on March 21 after keeping the currency virtually constant for the previous 18 months.
Production and new orders in April continued the months-long contraction, although the production index, which recorded 45.3, was slightly better than the 44.6 recorded in March. The new orders index improved to 45.3 from 45.1.
The sub-index for future production expectations also improved to 57.7 from 52.5 in March, when it was at its lowest level since it was first included in the survey a decade ago. The April number was still the third lowest in a decade.
“The continuation of the war in Ukraine means that companies are anticipating more price and supply challenges, leading to other relatively pessimistic outlook for business activity,” said David Owen, economist at Standard & Poor’s Global.