Cityscape in Egypt

Egypt PMI January 2023

Egypt: Non-oil private sector conditions deteriorate at a sharper pace in January

The S&P Global Purchasing Managers Index (PMI), which measures business activity in the non-oil private sector, dropped to 45.5 in January, down from Decembers 47.2. As such, the index moved further below the 50.0 no-change threshold, where it has been mired for the past 26 months. The reading signaled a steeper deterioration in private sector operating conditions from the previous month.

Januarys downturn came on the back of new orders contracting at a faster rate. The continued intensification of price pressures has limited clients budgets further, dampening domestic sales, while foreign sales have slid at a steeper rate since September. Weak demand, coupled with import restrictions, limited activity and output levels were reduced as a consequence.

Turning to prices, the sharp weakening of the Egyptian pound against the U.S. dollar continued to drive inflation; purchase price inflation soared to its highest level since July 2018 in January. Consequently, output prices were raised at the quickest pace in nearly six years.

Assessing the impact of recent price developments on demand and activity, firms sentiment regarding output expectations in the coming 12 months deteriorated to the third-lowest level in the series history—which began in April 2012. As a result of all these factors, headcounts were cut in January. That said, staff costs rose as firms increased salaries to shield workers purchasing power from inflation.

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