Updated March 5th, 2024 at 11:30 IST

Egypt's non-oil business sector hit by Suez Canal disruption: PMI Survey

Attacks by Houthi militants in Yemen led to shipping diversions away from the Suez Canal, resulting in higher import costs for Egyptian firms.

Reported by: Business Desk
Egypt business sector PMI | Image:Suez Canal Authority
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Egypt business sector PMI: Egypt's private sector experienced a further downturn in activity in February, exacerbated by a decline in Suez Canal freight following attacks on shipping in the Red Sea, according to a survey released on Tuesday.

The S&P Global Purchasing Managers' Index (PMI) for Egypt fell to 47.1 in February from 48.1 in January, marking the 39th consecutive month below the growth threshold of 50.0. This drop represented the lowest overall index reading in 11 months, with new orders declining at the fastest pace since March 2023. Domestic sales were also affected, facing inflationary pressures and supply-side challenges.

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S&P economist David Owen commented, "Egypt's non-oil economy appeared to suffer markedly in February as it found itself caught in the middle of the wider regional crisis."

Inflation in Egypt eased to an annual rate of 29.8 per cent in January from 33.7 per cent in December, according to the country's statistics agency.

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Despite a major investment deal with Emirati sovereign fund ADQ announced by the Egyptian government in late February, which boosted international bonds and alleviated currency pressure, challenges persisted. Attacks by Houthi militants in Yemen led to shipping diversions away from the Suez Canal, resulting in higher import costs and increased purchase costs for Egyptian firms. This disruption also contributed to the most significant prolongation of supplier delivery times since June 2022.

With shrinking demand, companies reduced output, with the output sub-index falling to 44.3 in February from 46.6 the previous month.

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S&P Global noted, "The pace of contraction was the sharpest in just over a year, with comments from survey panelists noting that shipping disruption and weaker tourism due to the Israel-Gaza war had also impacted activity."

(With Reuters inputs.)

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Published March 5th, 2024 at 11:30 IST