Egypt Non-Oil Private Sector Returns to Expansion

The S&P Global Egypt PMI edged down to 49.8 in January 2026 from 50.2 in December, slipping just below the 50 threshold. The latest reading signals a marginal deterioration in non-oil business conditions, even as output rose for a third straight month. Production growth was supported partly by stronger foreign demand, but overall new orders declined slightly after recent gains, pointing to softer domestic sales. With output still rising and fewer new jobs coming in, firms focused on clearing backlogs, which fell at the fastest pace in nearly three years. Spare capacity led companies to trim staffing levels, marking the sharpest drop in employment since late 2023, while purchasing activity also eased. Cost pressures remained muted, with input prices rising slowly, allowing firms to cut selling prices for the first time since mid-2020. Despite the slowdown, sentiment stayed cautiously positive, with businesses expecting gradual improvements in demand over the year ahead.

The S&P Global Egypt PMI came in at 50.2 in December 2025, following 51.1 in November, marking a second consecutive month of expansion in non-oil business activity, a development observed only twice in the past five years. Output and new orders continued to rise, supporting ongoing growth, though both expanded more moderately than in November. Manufacturing and construction sectors recorded higher production, while wholesale, retail, and services saw declines. Employment fell for the first time in two months, reflecting cautious hiring, while input stocks declined for the third consecutive month amid ongoing supply-side constraints. On the purchasing side, firms increased their buying activity for the first time in ten months, responding to stronger demand. Input cost inflation remained subdued, rising slightly, and selling prices edged up only marginally. Overall, business sentiment was cautious, with firms taking a measured approach to growth amid mixed demand signals.

The S&P Global Egypt PMI climbed to 51.1 in November 2025 from 49.2 in October, marking the first improvement in non-oil operating conditions since February. The latest reading was also the highest since October 2020. Historically, such a PMI level suggests that annual GDP growth could exceed 5% in the fourth quarter. Output increased for the first time since January, posting the strongest expansion in five years, while new orders also grew after eight months of decline. Despite these, firms remained cautious on hiring, leaving employment unchanged, which contributed to a rise in outstanding work for the third month in a row. Firms’ purchases of new inputs also fell at a faster pace, whereas input inventories showed signs of stability. Regarding prices, overall cost inflation eased to an eight-month low, and selling prices rose at the softest rate in seven months. Lastly, expectations for future activity remained positive, supported by stronger demand signals.