Employment cuts also accelerated to the fastest rate in four months
Egypt’s non-oil business saw worsening conditions as the country moved towards the end of 2020, witnessing drops in new orders and output triggered by the sharp increase of COVID-19 cases, which also increased job cuts.
In a report released Tuesday, the IHS Markit Purchasing Managers’ Index dropped to 48.2 in December, reversing three months of expansion. A reading of 50 or more indicates growth; Egypt’s PMI was 50.9 in November.
December’s PMI was the lowest reading since June 2020, according to data compiled by Bloomberg.
"With the possibility of tighter public health measures in the future, surveyed businesses indicated that clients had held off from completing new orders," IHS Markit said.
The sudden rise of cases as the year came to an end caused drops in client demand, which led to a build-up of excess input, with inventories rising at the strongest rate since June 2012.
Employment cuts accelerated to the fastest rate in four months, even with companies previously surveyed by HSBC stating their optimism for the new year and increased hope due to the release of COVID-19 vaccines.
The index fell below the 50.0 no-change mark in December, registering 48.2 to signal a moderate deterioration in the health of the non-oil sector. After posting 50.9 in November, the latest reading ended a three-month upturn in the economy that followed a sharp downturn caused by the pandemic.
Companies reported a decline in business activity in December, resulting from the drop in sales with consumers becoming cautious due to the fast-rising COVID-19 numbers. Surveyed businesses stated that they held off from completing new orders with the possibility of tighter restrictions.
“The decline in sales was a surprise to those firms that made additional purchases earlier in the fourth quarter, as stocks of unused inputs built up at the quickest rate since mid-2012,” David Owen, an economist at IHS Markit, said in the report.
On the price front, Egyptian non-oil firms registered only a slight mark-up in selling charges at the end of the year, the slowest recorded in four months.
