ArabFinance: The headline seasonally adjusted S&P Global Egypt Purchasing Managers’ (PMI), an indicator of the performance of the non-oil private sector, hit 46.5 points in March, down from 48.1 points in February, marking the highest decline since June 2020, data collected in S&P Global Egypt PMI's survey showed.

Egypt’s non-oil sector was greatly impacted by additional pressures of inflation on energy, food, and raw material, as the Russian-Ukrainian war continues to weigh on the economy, leading to a drop in output.

Egypt's non-oil companies recorded lowest output, new orders, and stocks levels since the outbreak of Covid-19 in March 2020, which was the result of lower demands caused by inflated prices.

The devaluation of the EGP in March pushed up import costs which led to inflated purchase prices (investment costs) for businesses.

To tackle the increase in prices and the decline in demand, Egyptian companies reduced their purchases at the end of the first quarter of 2022. Inventories registered lowest level since May 2020.

The survey further showed that 23% of companies suffered increases in input costs, while only 6% addressed that by raising client fees, as decline in sales compromised efforts to maintain profit margins.

Sentiments hit record-low, as the outlook for the rest of 2022 was the most negative since April 2012, affected by worries over the inflationary impact of the Russian-Ukrainian war.

Decline in sales and the grim outlook caused companies in Egypt to cut jobs for the fifth consecutive month in March.

"The non-oil economy was clearly hit by the effects of the Russia-Ukraine war during March, with firms often seeing clients pull new orders back amid increased prices and economic uncertainty. Output levels followed suit with the sharpest fall since June 2020 during the first global COVID-19 lockdown,” Economist at S&P Global David Owen commented.

"The downturn was clearest to see in industrial sectors such as manufacturing and construction, where businesses and clients were more greatly exposed to energy and material price rises due to the war. Wholesale & retail firms were also hit by a sharp increase in food prices,” Owen said.

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