Cairo: Egypt’s non-oil private sector recorded its slowest contraction in three months in October, signaling a gradual stabilization in business conditions even as inflationary pressures continue to weigh on companies. According to the latest S&P Global Egypt Purchasing Managers’ Index (PMI) survey, the headline index climbed to 49.2 from 48.8 in September, marking a modest improvement though remaining below the critical 50-point threshold that separates growth from contraction.
The October PMI reading reflects a tempered sense of optimism across Egypt’s non-oil industries, particularly manufacturing and services, where business activity showed resilience despite rising costs and weakened purchasing power. Firms reported that output and new orders declined at a slower pace than in recent months, suggesting that domestic demand may be starting to stabilize. Some manufacturers even witnessed mild growth in new business inflows, hinting that consumer confidence could be inching upward.
Employment trends offered a glimmer of hope, with private sector firms expanding their workforce for the third time in four months. Though job creation remained marginal, it indicated that businesses are beginning to rebuild operational capacity after a long period of cutbacks. Production levels also steadied, with several firms citing improved order volumes and better control over supply-chain disruptions. This stabilization was particularly evident in the manufacturing sector, which benefited from slight increases in export demand.
Despite these positive signs, input cost inflation continues to strain Egyptian businesses. The survey revealed that input prices rose at their fastest pace in five months, largely driven by a sharp increase in wages the steepest since October 2020. Many companies, however, absorbed these higher costs rather than passing them on to customers, which helped to slightly ease selling price inflation. Yet, the delicate balance between profitability and competitiveness remains a challenge for firms already grappling with elevated import costs and a weak currency.
Business sentiment showed a modest rebound in October. The survey noted that companies were “slightly more optimistic” about future output and demand prospects, buoyed by signs of steadier domestic consumption and expectations of policy reforms aimed at supporting private sector recovery. Nevertheless, optimism remains below historical averages, as uncertainty over inflation, fiscal tightening, and foreign currency availability continues to dampen long-term growth prospects.
The latest PMI results suggest that Egypt’s economy is finding a fragile footing after months of steep contraction. With inflation still hovering in double digits and foreign reserves under pressure, policymakers are likely to maintain a cautious stance. Economists have noted that while the slower pace of contraction offers a degree of relief, the country must address underlying structural issues such as high import dependency and weak productivity to secure sustainable growth.
Overall, the October PMI data paints a picture of tentative stabilization within Egypt’s private sector. Although the economy continues to face formidable headwinds, including elevated costs and limited access to foreign currency, the easing pace of decline hints that the worst phase of the downturn may be over. For businesses and investors, the report offers cautious optimism that Egypt’s non-oil economy may be inching closer to recovery provided inflationary and currency pressures remain under control.