Increasing prices in Egypt depressed the operating conditions of non-oil private businesses, resulting in a strong plunge in output, input buying and low employment numbers, according to a business survey.
The IHS Markit Egypt Purchasing Managers’ Index (PMI) posted 48.1 in February. The index was below the 50.0 neutral mark for the fifteenth month running and only fractionally higher than January's nine-month low of 47.9.
David Owen, Economist at IHS Markit, said: "The pandemic-led surge in input prices and the Omicron wave continued to derail Egypt's recovery in the first quarter of 2022, as the February PMI signalled a deterioration in non-oil economic conditions.
The Output and New Orders sub-indices extended a contraction in February, as non-oil companies indicated a strong decline in activity in response to weaker sales.
"Anecdotal evidence suggested that a recent surge in prices had contributed to a drop in client demand. New orders from abroad decreased for the first time since last October," the survey noted.
While the strongest downturns in output and new business were seen in construction, manufacturing was the only area to see an outright (but marginal) expansion in new orders in February.
The level of confidence among businesses dropped to its lowest level April 2012 over concerns about economic conditions and the impact of high prices. According to the survey, only 11 percent of businesses expect output to expand over the next 12 months.
Lower activity and confidence led companies to reduce their staffing levels, resulting in a fourth successive monthly drop in employment. "Despite this, firms kept on top of new work and even registered a slight contraction in backlogs for the first time since last June," the survey noted.
(Reporting by Seban Scaria; editing by Daniel Luiz)