IHS Markit’s PMI is a composite gauge designed to give a single-figure snapshot of operating conditions in the non-oil private sector economy in Egypt.
In its report on Egypt’s PMI, issued on Tuesday, IHS noted that the sector’s output went down slightly at the end of the third quarter of 2021 following a fractional increase during August.
Firms reported a slight decline in new orders received during September as well, with a drop witnessed in client demand.
“In particular, sales to foreign customers dropped sharply for the first time since March,” according to the report.
Meanwhile, the report pointed to a deterioration in business conditions in the Egyptian market during September as output and new orders decreased due to weaker customer demand.
Additionally, the fall in inventories led firms to make additional purchases to avoid raw material shortages and limit the impact of future cost inflation, according to the report.
On the other hand, the report showed that Egyptian firms in the non-oil private sector reported a record level of confidence concerning future business activity in September, as optimism grew that the economy — on the domestic and global levels — will recover from the COVID-19 pandemic over the next 12 months.
“The overall level of optimism climbed to the highest recorded since this particular series began in April 2012, with around 71 percent of panellists giving a positive forecast,” read the report.
It attributed this improvement to the boost in Egypt's vaccination rate and the easing of travel measures around the world to support tourism activity, and also led to a rise in firms' employment numbers for the third successive month in September.
However, the rate of job creation remained mild as some companies struggled to find staff replacements.
Moreover, Egyptian non-oil companies had to deplete their inventories of purchases in September for the second month running, as several reported difficulties buying new inputs due to global shortages, according to the report.
However, delivery times for inputs improved at a new record pace in September owing to the rising demand for suppliers, which led them to boost their capacity.
Also, raw material price hikes played a role in this regard, with purchase cost inflation accelerating to the fastest in just under three years, according to the report.
It also noted that companies saw a renewed increase in staff costs, leading to an even sharper uptick in overall price pressures in September than in August.
Egypt’s Central Agency for Public Mobilisation and Statistics is expected to announce the figures of September’s inflation next week.