The headline PMI reading rose to 46.8 in July, from 46 in June, marking the seventh consecutive month in 2026 that the index has remained below the neutral 50 threshold separating growth from contraction.
The latest reading points to GDP growth slowing down to around 4 percent during the third quarter of 2026.
According to the International Monetary Fund (IMF), Egypt’s economic growth is projected to accelerate to 4.6 percent in 2026, up from 4.4 percent in 2025.
The PMI reading comes after the IMF warned that Egypt needs to expedite progress on structural reforms to unlock more sustainable private-sector-led growth and participation in the economy, through reducing the state’s role in the economy, advancing the State Ownership Policy, and accelerating asset sales.
The IMF unlocked $1.8 billion in disbursement for Egypt after the completion of the seventh review under the billion Extended Fund Facility and the second review under the Resilience and Sustainability Facility.
New orders also fell for the seventh month straight in July, on the back of sluggish market conditions, ongoing price pressures deterring customer spending as well as delays in maritime shipping, and fewer new projects.
As a result, businesses have pulled back on their total activity, with contraction pace remaining sharp but lowered slightly, to the least severe in four months.
Meanwhile, work backlogs rose at the second-fastest rate in almost three years. This came as Egyptian non-oil businesses faced raw material constraints and continued to lower their employment, although the pace of layoffs dropped and was marginally slower, which altogether created output bottlenecks for some firms.
Purchasing activity also decreased at its sharpest rate since September 2023, with around one third of businesses reducing their input buying due to fewer new orders.
Firms’ pre-production inventories saw the first drop in five months, as businesses operated with smaller stock levels amid limited raw material availability and liquidity.
In contrast, supply chains improved performance for the first time since March 2026, with delivery times marginally reduced as the impact of the regional conflict on local supply lines eased.
Inflationary pressures continued their downward streak, with overall input costs rising but by the slowest pace since January and remaining below the long-run average, signalling that “spending levels may start to turn”, according to S&P Global Senior Economist David Owen.
It’s worth noting that annual headline inflation slowed by 0.9 percent in June 2026 to 12.2 percent, down from 13 percent in May.
Purchase price inflation also slowed down amid falling global oil prices and a weakened US dollar, easing output price inflation to its lowest rate in four months.
The Egyptian pound gained slightly against the US dollar at the beginning of this week, trading at EGP 50.48, compared to last week’s closing rate of EGP 51.21.
The currency is still EGP 2.5 weaker in value since the outbreak of the US-Israeli war on Iran in late February and EGP 1.6 weaker since the reignition of the conflict last month.
Some items’ cost remains high, however, as geopolitical tensions continue; “we may see renewed upside risks to domestic cost pressures that could scupper predictions of a recovery in new business,” Owen said.
July’s PMI saw major improvement in terms of business confidence, with the Future Output Index climbing to its highest level since June 2022, marking the third rise in four months regarding optimism on forecasts for the upcoming year.
Firms showed stronger hope for customer demand, although dependent on regional developments influencing confidence and pricing trends.
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