RIYADH: Egypt’s Purchasing Managers’ Index reached 46.9 in February, signaling a steep downturn in the country’s non-oil economy, according to credit rating agency S&P Global. It predicts PMI to stay firmly below the 50 neutral mark. However, February’s PMI figure is up from January’s 45.5, which indicates a somewhat softer downturn. "The latest PMI data for Egypt continued to signal a troubled market in February, but with some relief after a rocky start to the year,” said Senior Economist at S&P Global Market Intelligence, David Owen. The report noted that the downturn in the African country’s non-oil economy is mainly attributed to the drop in demand, as a result of high inflation and supply chain pressures. Consequently, business confidence hit a near-record low and job numbers plunged at the fastest rate in almost nine months, it added. “The downturns in output and new orders were not as severe in February compared to the first month of the year, as higher prices led to a solid, but softer fall in new business intakes,” Owen explained. “Nonetheless, the sustained fall in demand led businesses to cut employment levels at the fastest rate in nine months, while input buying also decreased sharply,” he added. Export sales also dropped for the second month in a row, as the foreign economic climate suppressed sales. Meanwhile, non-oil firms opted for reducing their purchasing activity during February as the high costs associated with materials forced businesses to cut down purchases and use current stocks instead. This resulted in a decrease in input inventories for the fourth consecutive month. With regard to the average lead time faced by non-oil companies, it continued to prolong as import controls further pressured supply chain procedures. “Continued demand weakness, persistent inflation and ongoing import controls to restrict FX flows mean that companies are likely to face a prolonged downturn in 2023,” Owen cautioned. While initial signs of a pick-up in the global economic landscape may help to bring some stabilization, S&P Global Market Intelligence believes that FX markets are not yet at their equilibrium state and that inflation will likely remain in double-digits this year.