The headline PMI fell further below the 50 no-change mark to 48.9 in February, down from 49.8 in January, reflecting weaker demand and rising cost pressures.
This came despite continued growth in non-oil GDP and domestic non-oil output, the report said. However, the PMI remains above its long-run average of 48.3.
The decline in activity ended three months of expansion, as non-oil firms reported a drop in new orders.
The downturn was the sharpest in five months, although still relatively modest overall. “The dip followed an unusually strong run of business performance, while the latest figures are consistent with annual GDP growth running at approximately 4.5 percent,” said S&P Global Senior Economist David Owens.
Sales declined across manufacturing, wholesale, retail, and services, while construction recorded an increase in order volumes. Overall, companies responded by limiting capacity and reducing purchases.
Employment fell slightly for the third consecutive month, as companies continued to cut jobs and freeze hiring. This was partly offset by some firms recruiting to improve operations.
Purchasing activity among non-oil firms continued to decline, but at a slower pace than in January, allowing supplier activity to remain stable as demand for inputs stayed moderate.
Egyptian non-oil companies maintained a subdued outlook for future output.
Price pressures continued to rise, driven by higher wages and increased material costs, including oil and metals. Total input costs rose at their fastest rate since May 2025.
“Firms will therefore be keen to see commodity markets settle, especially as recent periods of high input cost inflation have typically constrained business output,” Owens said.
Selling prices increased slightly, with most firms choosing to absorb higher costs rather than pass them on fully to customers.
Egypt’s macroeconomic conditions have shown signs of improvement, according to the International Monetary Fund (IMF) Executive Board meeting in February.
The fund approved the combined fifth and sixth reviews of Egypt’s economic reform programme under the $8 billion Extended Fund Facility, along with the first review under the $1.3 billion Resilience and Sustainability Facility. This is expected to unlock around $2.27 billion in new financing in the coming days. Expanding the private sector’s role in the economy is a key pillar of the Extended Fund Facility programme.
While Egypt’s stabilization measures are producing results, with growth accelerating and inflation easing, the IMF warned of uneven progress in structural reforms and rising risks from regional geopolitical tensions, tighter global financial conditions, and delays in energy and other structural reforms.
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