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Arab Finance: Business activity across Egypt’s non-oil private sector continued to expand at the start of the year, extending the current growth sequence seen since late 2020, although overall operating conditions weakened slightly as demand slowed, according to the latest S&P Global Egypt Purchasing Managers’ Index.
The headline, seasonally adjusted PMI slipped below the 50.0 no-change threshold in January, easing to 49.8 from 50.2 in December, indicating a marginal deterioration in business conditions.
The index, which measures new orders, output, employment, supplier delivery times, and stocks of purchases, remained above its long-run average and broadly aligned with continued non-oil gross domestic product growth.
Output increased for the third consecutive month, marking the longest period of sustained activity growth since the second half (H2) of 2020.
Some firms linked the rise in production to stronger demand from export markets. However, others reported weaker order volumes compared to December, with overall sales declining slightly after two months of growth.
As output rose while new orders fell, companies were able to work through outstanding business. Although modest, the reduction in backlogs was the fastest recorded in nearly three years.
This easing in workloads led some firms to leave positions unfilled, resulting in the largest decline in employment since October 2023.
Purchasing activity also softened. After expanding for the first time in ten months in December, input buying fell slightly in January.
At the same time, the delivery of earlier purchases and weaker demand contributed to an increase in inventories, with stocks of purchases rising for the first time since September.
Cost pressures continued to ease during the month, contributing to a decline in selling prices for the first time since July 2020.
Firms reported slower increases in operating expenses, with both input costs and staff costs rising at a reduced pace compared to December.
While some companies cited higher prices for items such as metals and fuel, overall input price inflation remained below its historical average.
Looking ahead, non-oil firms maintained a cautious outlook for activity over the next 12 months.
Expectations remained positive overall, but only marginally, reflecting continued uncertainty around demand conditions.
