Despite hopes for a recovery in demand, sentiment was dampened by weak market conditions, high inflation and sustained supply problems
"Businesses showed little optimism towards future activity, as expectations slipped to the second-lowest on record," said S&P Global economist David Owen. For its latest survey, S&P Global recorded just 9% of respondents as forecasting growth in the coming year, falling from 13% in July.
Despite hopes for a recovery in demand, sentiment was dampened by weak market conditions, high inflation and sustained supply problems. "Monetary policy uncertainty, a weakening exchange rate, and the continued war in Ukraine mean there are still high levels of risk for the economy over the rest of 2022," Owens said.
Egypt’s Purchasing Managers' Index (PMI) saw a slight improvement from July’s 46.4 to record 47.6 in August, remaining below the 50.0 line that signifies growth. August’s recording is the highest reading since February.
S&P Global pointed towards easing inflationary pressures as helping alleviate spending constraints at clients and led to slower decreases in output and new orders. The report explained that the headline index rose driven mainly by the output and new orders indices which saw growth for the second consecutive month from June's recent lows.
Client demand continued to decline in August due to rapid inflation, with manufacturing, services, construction and wholesale & retail all recording a decline in new business.
"There were reports that a lack of raw material supply had constrained total output in August, exacerbated by recent import regulations and the war in Ukraine," S&P Global wrote.
The subindex for output in August saw a slight uptick to 45.8 from July’s 43.6, with future output expectations declining to 53.5 from 56.1 in July. Input lead times lengthened only marginally, and at the softest rate since the start of 2022, with the new orders subindex improving to 45.1 from 43.1.
S&P Global pointed towards a broad softening of local input cost due to inflation easing for the second consecutive month. Prices charged by non-oil businesses rose at a slower rate in August, despite rising fuel and raw material prices leading to higher purchase prices.