Optimism and business confidence levels among Egyptian non-oil private sector firms fell to its lowest in more than 10 years in November, a new survey showed on Tuesday.
The headline seasonally adjusted S&P Global Egypt Purchasing Managers’ Index (PMI) rose to 48.4 last month from 47.9 in October, but stayed below the 50.0 no-change mark indicating an overall contraction in business activity.
In addition, the activity outlook for the next 12 months dropped to its weakest since data was first collected in April 2012 on high inflation rates and persistent falls in output and new orders. Inflationary pressures also resulted in drop in client sales, leading to reductions in employment and purchasing, the report said.
"Optimism in the Egyptian non-oil economy is eroding as we approach the end of the year, as economic challenges arising from the Russia-Ukraine war put additional pressure on costs and capacity at businesses," said David Owen, senior economist at S&P Global Market Intelligence.
Output and new business levels declined in November, albeit at a slower rate than in October. Firms said historically high inflation rates continued to depress customer demand, while unresolved import problems constrained activity. The downturns were especially marked among wholesale & retail companies.
"Although CPI inflation eased from September's record of 38% to 35.8% in October, it was still one of the highest ever," said Owen.
Due to the stubborn inflation, non-oil firms' level of confidence in future activity fell to its lowest since the series began over 11-and-a-half years ago. Expectations for the future were only slightly positive, while firms in the manufacturing and construction sectors slipped into pessimism territory.
Employment levels continued to fall in November amid reduced labour requirements, but the rate of job cuts eased from the previous month as outstanding business increased.
(Writing by Brinda Darasha; editing by Seban Scaria)