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The headline PMI dropped to 48.8 in September from 49.2 in August, marking its lowest reading in three months and remaining below the neutral 50.0 threshold for the seventh consecutive month. The index reflects a moderate but persistent deterioration in operating conditions across Egypt’s non-oil private sector.
Steep drop in new orders and output
The downturn was primarily driven by a significant fall in new sales, which declined at the sharpest rate since April. Survey respondents cited subdued economic conditions, rising prices, and mounting wage pressures as key factors contributing to the decline in demand. Output levels also fell, marking the seventh consecutive month of contraction, with wholesale and retail firms reporting the steepest declines.
Purchasing activity mirrored the slowdown, declining for the seventh consecutive month. However, some firms opted to build up inventories, leading to the first rise in stockpiles since May.
Employment stalls, confidence slips
Employment levels remained broadly unchanged in September, ending a two-month streak of job creation. Nearly all surveyed firms reported no change in workforce numbers, attributing the stagnation to a lack of incoming work. Business sentiment also weakened, with confidence falling to one of the lowest levels recorded in the survey’s history.
Input costs ease, wage pressures mount
One bright spot in the report was a slowdown in input price inflation, which eased to its lowest level since March. This was largely attributed to the Egyptian pound’s recent strengthening against the US dollar, helping to reduce import costs. However, wage inflation accelerated, with total staff costs rising at the fastest pace since May 2024.
Prices charged by businesses continued to rise for the fifth consecutive month, though the pace of inflation moderated slightly. Firms indicated that price hikes were necessary to offset higher operating costs.
“The latest survey data pointed to a further decline in operating conditions across Egypt's non-oil economy; however, the downturn remained less steep than the survey trend and modest overall. Although companies are struggling to gain new work amid challenging market conditions as a whole, they can take some comfort from a softening of input cost pressures, driven by the pound's strengthening against the US dollar over recent months”, said David Owen, Senior Economist at S&P Global Market Intelligence.
The S&P Global Egypt PMI survey encompasses approximately 400 private sector firms, offering a timely snapshot of economic trends across the manufacturing, services, construction, and retail sectors.
As it is currently introduced to a community dialogue till the end of November, Egypt’s Narrative for Economic Development charts a map for the country’s economy over the coming five years. The new narrative represents a fresh economic model for Egypt, focusing on creating new jobs and reaching 1.5 million jobs by 2030, while pushing forward economic growth to hit seven per cent by then.
The annual meetings of the World Bank Group/International Monetary Fund (IMF) are set to kick off next week. The Egyptian delegation is anticipated to showcase the positive performance on the macroeconomic indices front, along with the new economic narrative to pave the way for productive discussions with the Fund concerning the fifth and sixth reviews of the outstanding $8 billion loan deal, in addition to the first review of the newly-approved Resilience and Sustainability Facility $1.3 billion loan deal.
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