Egypt's Purchasing Managers' Index (PMI) for the non-oil private sector fell to 49.8 in January 2026, down from 50.2 in December, according to a report by S&P Global released on February 3. The index, which measures the health of the manufacturing and services sectors, indicates a slight contraction in the sector. A reading above 50 signifies expansion, while a reading below 50 indicates contraction.
Despite the decline, the report highlights the resilience of Egypt's economy, with the non-oil private sector continuing to grow for the third consecutive month. This growth was primarily driven by robust foreign demand, which supported the activity of export-oriented businesses. However, the domestic market experienced a more pronounced slowdown in sales. The sector's growth has been sustained for its longest period since late 2020.
In response to sluggish domestic demand, companies focused on fulfilling existing orders from their backlogs, which decreased at the fastest pace in nearly three years. This approach, combined with excess production capacity, led to a cautious business environment. Consequently, the sector saw its most significant decline in employment since late 2023. The purchasing activity also slowed down, reflecting a prudent management of inventories by business leaders.
The report notes that cost pressures remained moderate, with a slow increase in input prices allowing businesses to lower their selling prices for the first time since mid-2020. Despite this slowdown, the business outlook remained cautiously positive, with companies anticipating a gradual improvement in demand over the coming year.
The S&P Global Egypt PMI is a composite index that evaluates the health of the non-oil private sector. It is based on a survey of 450 companies from the industry, services, construction, and retail sectors. The final calculation is a weighted average of five key indicators: new orders (30%), production (25%), employment (20%), suppliers' delivery times (15%), and purchases stock (10%).
The decline in the PMI is attributed to a decrease in new orders and production, while employment and suppliers' delivery times also contributed to the contraction. However, the report emphasizes that the business outlook remains positive, with companies expecting an improvement in demand over the next year.
The Egyptian economy has shown resilience despite the challenges faced by the non-oil private sector. The government's efforts to improve the business environment and stimulate economic growth are expected to have a positive impact on the sector in the coming months. The PMI report provides valuable insights into the performance of the non-oil private sector, which is a significant contributor to Egypt's economy.
Key points
- Egypt's PMI falls to 49.8 in January, indicating a minor decline in the non-oil private sector.
