File Photo: Tailors sewing at the Marie Louis textile clothing and textile factory in the 10th of Ramadan city, about 60 kms north of Cairo. AFP
The headline seasonally adjusted PMI slipped to 50.2 in December, down from a 61-month high of 51.1 in November, but remained above the 50 no-change mark for the second consecutive month, signalling a sustained improvement in operating conditions.
Historically, a PMI reading of 50.2 correlates with annual gross domestic product growth of around 5 percent.
S&P report on Egypt attributed this upturn to the continued expansions in new orders and output, supported by reports of stronger demand and increased client spending. New business rose for the second month running, although the pace of growth eased compared to November. Output also expanded, with growth reported in manufacturing and construction, while wholesale and retail trade and services recorded declines.
Purchasing activity increased for the first time in ten months as firms responded to higher workloads. However, shortages reported by some suppliers led to a third consecutive monthly fall in input stocks.
Employment declined again in December, as firms remained cautious about hiring. Those reporting lower staffing levels cited difficulties in replacing employees who had left, resulting in the sharpest fall in employment in 13 months, albeit still modest overall.
Input cost inflation remained subdued, despite edging up slightly from November’s recent low, with higher costs reported for fuel, cement, and wages. The impact on expenses was limited, leading to only a marginal increase in average selling prices.
Commenting on the data, David Owen, Senior Economist at S&P Global Market Intelligence, said Egyptian businesses saw conditions improve towards the end of 2025, with the final quarter marking the strongest performance since the last quarter of 2020.
He noted that improved order books had supported recent business performance, alongside softer inflationary pressures that enabled firms and consumers to spend with greater confidence. However, Owen cautioned that the weaker PMI reading in December compared to November suggested the recovery remained fragile, with ongoing domestic and global uncertainties weighing on business sentiment.
Despite the improvement in current conditions, firms’ expectations for future activity remained neutral in December, reflecting subdued confidence levels during the second half of 2025.
Egypt is currently prioritizing five sectors under its new economic narrative, through which the country aims for a seven percent real GDP growth and creation of 1.5 million job opportunities. The five sectors involve agriculture, energy, tourism, manufacturing, information and communication technology.
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