Egypt’s non-oil private sector faced a widening of the supply chain crisis in October as companies experienced difficulties acquiring raw materials, according to a latest business survey. 

The IHS Markit Purchasing Manager’s Index (PMI) for the month showed that a lack of inputs let to a contraction in output and the sharpest increase in costs and charges for more than three years.

The headline PMI in October was 48.7, down from 48.9 in September and the lowest since May.

IHS Markit said Egypt’s index remained above the series average, which began in April 2011

“The Egyptian non-oil sector's recovery was stemmed in October as supply chain problems worsened around the globe,” said David Owen, IHS Markit economist.

“Having previously been less impacted than Europe and other regions, Egyptian firms started to feel the burden of material shortages on both output and inventories, with the latter decreasing at the sharpest rate in 16 months. This will likely spill over into further reductions in output by the end of the year,” he added.

Employment numbers picked up at the fastest rate in two years, with firms citing the need to boost staff numbers post-pandemic.

Costs relating to the purchasing of inputs also rose at the fastest rate since August 2018, Owen said, pushing up selling charges. As well as inflationary pressures on raw materials, firms faced increasing freight costs.

“This suggests that businesses and consumers will struggle to avoid price rises in the months to come,” he said.

According to the survey, export sales fell at the fastest pace in 17 months, although an ongoing recovery in local sales meant that demand conditions remained relatively buoyant.

There were growing concerns that supply disruption will intensify in the coming months and potentially limit the economic recovery, leading to a substantial fall in output expectations from September’s record high.

(Reporting by Imogen Lillywhite; editing by Seban Scaria)         

Imogen.lillywhite@refinitiv.com

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