Cairo – Mubasher: Egypt's non-oil private market continues its downturn in April 2024, accompanied by a significant easing of inflationary pressures.
The S&P Global Egypt Purchasing Managers’ Index (PMI), which provides a snapshot of operating conditions in the non-oil private sector, remained in contraction territory for the forty-first consecutive month, registering 47.40, slightly lower than March's 47.60.
Business activity declined notably, leading to a renewed drop in employment due to challenging market conditions.
However, improved currency availability from recent policy measures contributed to a notable cooling in the rate of cost inflation, with average prices charged rising only marginally.
Despite a slight rise in new export orders in March, April saw them remaining broadly unchanged. Non-oil private sector employment declined again, following a marginal rise in March, indicating a lack of pressure on business capacity.
Purchasing activity decreased, while stocks of purchases were raised marginally, with supply disruptions easing for the second consecutive month.
Inflationary pressures eased considerably in April, attributed partly to recent policy measures improving foreign currency availability.
Input cost inflation plummeted to its lowest since March 2021, and firms raised staff pay at the slowest rate in three months.
Egypt’s annual headline inflation decelerated to 31.80% in April from 33.10% in March.
With cost increases moderating and demand constrained, firms showed greater restraint in their own price setting, resulting in marginal output charge inflation, the weakest in two years.
Phil Smith, Economics Associate Director, at S&P Global Market Intelligence, said: "The past couple of months have seen some major policy shifts, and while we haven't yet seen much of an effect on the activity side of things, there has been a material impact on price pressures facing firms.”
“The exchange rate liberalisation has led to a drop in the formal rate of the pound against the US dollar, but with firms reporting greater availability of foreign currency, we've actually seen a slowdown in purchase cost increases as local FOREX supply-demand imbalances unwind,” Smith added.
He concluded: "Business confidence has perked up. Even so, in the context of historical data, very few firms are anticipating growth in the coming year, in a sign of continued caution towards the outlook.”
Business conditions in the Egyptian non-oil private sector exhibited a milder decline in March, attributed to a moderation in the inflation of production inputs, which posed a challenge to product prices.
