Operating conditions in Egypt's non-oil private sector worsens in December
(MENAFN) Operating conditions in Egypt's non-oil private sector worsened in December as both output and new orders experienced their sharpest declines in eight months, according to a report by Standard & Poor's on Monday. The S&P Global Purchasing Managers' Index (PMI) for Egypt dropped to 48.1 in December from 49.2 in November, marking the fourth consecutive month of contraction. A reading below 50 indicates a reduction in activity, reflecting ongoing challenges in the sector.
This decline was primarily driven by weak customer demand and intensifying inflationary pressures, which were further aggravated by the depreciation of the Egyptian pound against the U.S. dollar. David Owen, chief economist at S&P Global Market Intelligence, noted that while a recovery in Egypt's non-oil private sector is anticipated in 2025, the latest PMI data suggests it may face obstacles. Companies are contending with rising costs and subdued demand, resulting in the most significant drop in operating conditions since April of last year.
Employment levels in the sector decreased for the second consecutive month, although the decline was modest. Rising payroll costs, linked to increasing cost-of-living expenses, contributed to job losses. Input cost inflation also accelerated, driven by higher material costs and a stronger dollar. Despite these challenges, businesses were reluctant to raise prices, opting instead to reduce profit margins to sustain orders.
Nevertheless, non-oil companies remained optimistic about future activity, expressing hope for improved domestic and geopolitical conditions in 2025. The future output sub-index rose to 53.8 in December from 50.5 in November, signaling growing confidence. However, concerns about exchange rate fluctuations and ongoing price instability could limit demand in the near term, tempering the sector’s outlook.
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