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Egypt’s non-oil private sector remained under pressure in May, as persistent inflation, soft demand and worsening supply constraints continued to weigh on business conditions, according to S&P Global’s latest Purchasing Managers’ Index (PMI) survey.
The headline PMI inched up to 47.1 in May from 46.6 in April but stayed below the 50 threshold that separates growth from contraction, marking a fifth consecutive month of declining operating conditions.
“The May PMI findings added to signs that the Middle East conflict is likely to depress GDP growth in the second quarter,” said David Owen, Principal Economist at S&P Global Market Intelligence.
Demand remained fragile, with new orders falling for the fifth straight month. The pace of decline was largely unchanged from April’s recent low, as elevated prices continued to curb customer spending and limit new business inflows.
Output also contracted sharply, though the rate of decline eased slightly. The downturn was most pronounced in wholesale, retail, and services, while manufacturing and construction sectors showed mild recoveries after earlier weakness.
On the cost side, businesses faced intensifying inflationary pressures, with input prices rising at the fastest pace since early 2023. Firms cited higher fuel and electricity prices, currency depreciation, and increased wage bills, with wage inflation reaching its strongest level since 2018.
To shield margins, companies passed much of the rising costs on to customers, resulting in a sharp increase in selling prices, among the fastest in survey history.
At the same time, firms responded to weaker demand and higher costs by scaling back staffing. Employment declined at the quickest rate since June 2020, reflecting both layoffs and the non-replacement of departing workers.
(Writing by Ahmad Mousa; editing by Daniel Luiz)
