Cairo: Egypt’s non-oil private sector witnessed a modest contraction in September, according to the latest S&P Global Purchasing Managers’ Index (PMI). The index slipped to 48.8, down from 49.2 in August, marking the lowest reading in three months. A PMI below 50 signals a contraction in business activity, highlighting a slowdown in Egypt’s private sector outside the oil industry.
The contraction was driven primarily by a sharp decline in new sales orders, which fell at the fastest pace in five months. Businesses cited subdued domestic demand, rising prices, and wage pressures as key factors limiting new orders. Employment growth also stalled after two months of modest increases, with most companies reporting no change in staffing levels, reflecting caution amid uncertain market conditions.
Despite the slowdown, firms benefited from a softening of input cost inflation, which fell to its lowest level since March, partly due to a stronger Egyptian pound against the U.S. dollar. However, this was counterbalanced by rising staff costs, which increased at the fastest pace since May 2024, driven by higher living expenses and an increase in the minimum wage.
In response to weakening demand, inventory levels rose for the first time since May, as companies opted to maintain larger input reserves. Meanwhile, export sales continued to decline, marking the 10th consecutive month of contraction, with the steepest fall in three years.
Business confidence among Egypt’s non-oil private sector remained subdued, with output expectations for the coming year falling to one of the lowest levels in the survey’s history. Firms expressed concern over economic uncertainty, inflationary pressures, and the challenging global environment affecting trade and investment.
The data underscores ongoing economic challenges for Egypt’s private sector, particularly in non-oil industries. While easing input costs provide some relief, rising labor costs, stagnant employment, and continued export contraction suggest that companies are navigating a difficult business climate. Analysts expect businesses to remain cautious as they adjust strategies to maintain resilience amid persistent domestic and global pressures.
This modest contraction reflects the delicate balance Egypt faces between stimulating growth and managing inflationary pressures, particularly outside its energy sectors, which continue to anchor the broader economy.