Egypt’s PMI falls in October as global supply chain bottlenecks weigh on: IHS

Egypt’s non-oil private sector contracted for an 11th month in a row in October as international supply chain bottlenecks slowed production and weighed on future output expectations, a survey by IHS Markit revealed on Wednesday.

IHS Markit’s Purchasing Managers’ Index (PMI) dropped to 48.7 – below the 50.0 threshold that separates growth from contraction – compared to 48.9 in September.

“The Egyptian non-oil sector’s recovery was stemmed in October as supply chain problems worsened around the globe. Having previously been less impacted than Europe and other regions, Egyptian firms started to feel the burden of material shortages on both output and inventories, with the latter decreasing at the sharpest rate in 16 months. This will likely spill over into further reductions in output by the end of the year.” IHS Markit economist David Owen said in the survey.

“There were growing concerns among firms that supply disruption will intensify in the coming months and potentially limit the economic recovery, leading to a substantial fall in output expectations from September’s record high,” IHS Markit survey read.

The survey added that stocks of inputs fell to “the greatest extent since June 2020 as firms commented on the need to withdraw from their inventories to support business activity.”

The sub-index for future output expectations fell to 65.0 from 85.7 in September with the worsening supply chain disruption apparently weighing heavily on firms.

With supplies running short, and shipment delays widening, companies raised their input buying for the third month in a row during October.

“Firms were particularly concerned that high inflation could lead to a slump in demand and reverse the economic recovery,”

“Only 32 percent of companies projected a rise in output over the next year, though this remained much higher than the 2 percent of respondents expecting a decline,”