Egypt January non-oil business shrinks on inflation, Gaza-PMI

© Reuters. FILE PHOTO: Birds fly during sunset with Cairo skyline visible in the background, during foggy cold weather, Egypt February 1, 2024. REUTERS/Amr Abdallah Dalsh/File Photo

CAIRO (Reuters) – Non-oil private sector activity in Egypt shrank for a 38th month in January as inflation pressure and the conflict in Gaza continued to weigh on demand, a survey showed on Monday.

The S&P Global Purchasing Managers’ Index (PMI) for Egypt edged down to 48.1 from 48.5 in December, remaining below the 50.0 threshold that marks growth in activity.

“The ongoing decline coincided with solid contractions in output and new orders during January, amid evidence that high prices had continued to weaken client demand,” S&P Global said.

Egypt’s urban consumer inflation slid to an annual 33.7% in December from 34.6% in November and a historic high of 38.0% in September, according to the state statistics agency CAPMAS.

“Some firms signalled that the Israel-Gaza conflict and associated geopolitical tensions had a negative impact on tourism activity, which could lead to further headwinds for the non-oil economy over the next few months,” said S&P economist David Owen.

The subindex for new orders slid to 46.4 from 46.9 December, while the output subindex inched down to 46.6 from 46.7.

The subindex for business sentiment declined to 52.1 from December’s 55.1, but still above November, when it hit 50.9, its lowest level since the business confidence subindex was created in 2012.