Egyptian private sector activity extends contraction in May as inflation weighs – PMI | Investment News
CAIRO (Reuters) – Non-oil private sector activity in Egypt contracted for an 18th month in May as the Ukraine crisis, import restrictions and currency devaluation put pressure on prices , according to a survey published on Sunday.
The S&P Global Egypt Purchasing Managers’ Index rose to 47.0 from 46.9 in April, but still remained below the 50.0 threshold that separates growth from contraction.
“Increasing pricing pressure continued to weigh on customer spending,” S&P Global said. “Input cost inflation accelerated to its highest level in six months amid rising global commodity prices, a stronger US dollar and the banning of a number of imported goods.”
“Afterwards, companies reduced their purchases of inputs and their workforce, while the outlook for future activity weakened to their second lowest in the series’ history,” he added.
The ban on imports of certain products has caused supply shortages for several companies and a new requirement for letters of credit for importing many goods has led to increased customs delays, S&P Global said.
Headline inflation reached 13.1% in April from 10.5% in March.
The sub-index for overall input prices jumped to 62.1 from 58.3 in April and that of purchasing costs rose to 62.3 from 58.8.
“Non-oil business conditions in Egypt continued to be held back by rapid inflationary pressures in May, as survey panelists said rising market prices led to a sharp drop in demand and a further increase in oil prices. business spending,” said David Owen, economist at S&P Global. .
Production and new orders in May extended a multi-month contraction, with the production index, at 45.0, deteriorating from 45.3 in April and the new orders index falling from 45.3 to 44.6.
The future production expectations sub-index fell to 55.2, its second lowest since the survey included the first category 10 years ago. The index was at 57.7 in April.
(Reporting by Patrick Werr; Editing by Toby Chopra)
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