On Sunday, Purchasing Managers’ Index data showed that non-oil private sector activity in Egypt contracted for the 18th month in May.
The index data issued by Standard & Poor’s Global recorded a slight increase in the index reading, as it recorded 47 points, compared to 46.9 in April. However, it is still below the 50 point level separating growth and contraction.
Rising price pressures continue to weigh on customer spending, the corporation said, as input cost inflation accelerated to a six-month high amid increasing global commodity prices, a stronger US dollar and a ban on several imported goods. Consequently, companies reduced their purchases of inputs and employment levels, while expectations of future activity fell to the second-lowest level in the chain’s history. The corporation stressed that the ban on importing some products caused a shortage of supplies for many companies.
Core inflation rose from 10.5% in March to 13.1% in April. The sub-index for total input prices also jumped from 58.3 to 62.1, and the index for purchasing costs rose from 58.8 to 62.3. “Business conditions in the non-oil sector in Egypt remain affected by rapid inflationary pressures, as respondents indicated that higher market prices led to a sharp drop in demand and a further increase in business expenditures,” said David Owen, an economist at Standard & Poor’s Global.