Egypt’s January PMI is also below the series average of 48.2, which indicates a solid decline in overall business conditions, according to the IHS report on Egypt.

The report attributed the decline to drops in the output and new orders for non-oil products sub-indices, which indicates the sharpest decrease in non-oil activity in Egypt since June 2020.

Meanwhile, January’s PMI reading mirrored a solid and faster deterioration in business conditions across Egypt’s non-oil economy amid weaker client demand and inflationary pressures, the report explained.

Consequently, output levels in the non-oil business sector dropped in January at the quickest pace in over 18 months, while new business volumes also declined at a faster pace than in December.

Additionally, employment and purchasing activity in the non-oil business sector also fell, driven by a sharp rise in input costs.

“Nevertheless, output charges rose at the weakest pace for six months amid efforts to sustain customer sales,” the report said.

Furthermore, the construction, wholesale, and retail sectors witnessed the strongest downturn in activity in January, while the manufacturing and service sectors were more stable.

Regarding inflationary pressures, the report found that prices for raw materials, components, and transport continued to rise.

Additionally, employment numbers declined in the non-oil business sector during January for the third month in a row, as lower demand led to stable backlogs and reduced workloads.

“There was a renewed fall in purchasing activity, with the rate of contraction being the fastest seen since April 2021,” the report explained.

David Owen, an economist at IHS Markit, said that Egypt’s non-oil economy had a disappointing start to the year, as weak demand conditions led to stronger declines in output and new business.

On the other hand, Owen said that the sector’s firms remained largely confident that they would weather the current economic storm and see activity increase over the next 12 months.

“The degree of optimism picked up but remained lower than those seen through much of 2021,” he expounded.