Egyptian employees work at the construction in an industrial zone for exports and the domestic market near the Suez Canal and East Port Said. REUTERS
Despite this modest upturn, November's PMI reading remains below the neutral 50-point threshold that demarcates expansion from contraction, indicating that the sector continues to experience a contraction.
S&P, in its report on Egypt, highlighted that Egypt's output and new business levels experienced a significant decline in November, albeit at a slower pace compared to October.
Simultaneously, non-oil firms reported a more pronounced increase in their selling charges, marking the swiftest rise since March, as they sought to pass on elevated purchase costs arising from currency depreciation and supply constraints.
The agency underscored that the non-oil private sector encountered several factors, such as inflationary pressures, persistent production and new order declines, and a deterioration in demand rates.
These factors led to a decline in business activity expectations for the upcoming 12 months, plunging to their lowest levels since data collection commenced in April 2012, according to S&P.
These circumstances contributed to sluggishness in the purchasing activity of non-oil firms. However, some firms opted to augment their inventories as a safeguard against future price escalation.
The overall reduction in purchasing recorded in November was the most gradual since February 2022.
"The Egyptian non-oil firms manifested their lowest level of confidence in future activity in the series' history," the report explained.
In October, Egypt witnessed a decline in its annual headline inflation, which decreased to 38.5 percent from September's 40.3 percent, as reported by the Central Agency for Public Mobilization and Statistics (CAPMAS).
Meanwhile, the country observed a deceleration in its annual core inflation rate, which settled at 38.1 percent in October down from September's 39.7 percent, according to data from the Central Bank of Egypt (CBE).
S&P noted that despite the increase in purchase price inflation since October, it remains lower than the peak levels observed nearly in 2022.
Moreover, non-oil private firms faced challenges such as currency depreciation and supplier shortages, leading to elevated material prices and an acceleration of input price inflation in November compared to October, although it remained below the highs witnessed in late 2022 and early 2023.
Similarly, employment levels continued to decline in November due to reduced labor requirements, but the job cuts rate eased from October and became only modest, as per S&P's observations.
In the third quarter of 2023, Egypt's unemployment rate rose to 7.1 percent up from 7 percent in quarter two, according to data released by CAPMAS.