Egypt’s PMI Dips Amid Stagnation in Economic Activity: S&P Global

Summary

  • The Purchasing Managers’ Index (PMI) of S&P Global for Egypt has reduced to 48.1 from the previous 48.5 in the prior month of December. The index remains under the growth indicating threshold of 50.0.
  • January observed contractions in output and new orders, attributed to increased prices dampening client demand.
  • Egypt’s urban consumer inflation experienced a slide to 33.7% in December, down from 34.6% from November and a peak of 38.0% in September, as reported by the state statistics agency CAPMAS.
  • Geopolitical tensions and conflict in Israel-Gaza impacted tourism negatively, which may impose further challenges for the non-oil economy in the upcoming months.
  • The sub-indices for new orders and output experienced a decline and the business sentiment indicator also witnessed a downturn to 52.1 from December’s 55.1.

Comprehensive Assessment

According to recent data, Egypt’s PMI as tracked by S&P Global saw a slight decrease to 48.1 from December’s 48.5, signifying stagnancy in economic activity due to its position under the critical 50.0 mark.

“As the economic activities contract, it is evident that elevated prices have adversely affected client demand, resulting in reductions in new orders and output during January,” stated S&P Global.

Economic Markers

The state statistics agency, CAPMAS, reported a decrease in urban consumer inflation in Egypt, slipping to an annual rate of 33.7% in December, down from November’s 34.6% and a historic high of 38.0% in September.

External Factors

S&P economist David Owen highlighted that geopolitical issues, including the Israel-Gaza conflict, have negatively impacted tourism, potentially posing future challenges for the nation’s non-oil sector.

Business Indices

Meanwhile, the subindex for new orders recorded a slide from 46.9 to 46.4 in December, while the output failed to maintain its trend, edging down to 46.6 from 46.7. Furthermore, the business sentiment subindex declined to 52.1, down from December’s 55.1.

Notably, despite being lower than in December, the sentiment remains higher than the 50.9 mark registered in November, its lowest level since its inception in 2012.

These developments in Egypt’s PMI could potentially impact forex trading, particularly with the Egyptian pound, given their influence on the nation’s economic stability.

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