Egypt Daily News – The contraction in Egypt’s non-oil private sector activity slowed to its weakest pace in three months in May, as declines in output and new orders eased compared to the previous month. However, cost pressures increased due to rising supplier prices and exchange rate volatility.
The S&P Global Egypt Purchasing Managers’ Index (PMI) rose to 49.5 in May from 48.5 in April. While still below the 50-point threshold that separates growth from contraction, the index is now above its long-term average of 48.2.
According to David Owen, Senior Economist at S&P Global Market Intelligence, several companies continued to report weak market demand, prompting reductions in both purchasing and staffing levels. Owen added that uncertainty in currency markets and concerns over future global trade conditions—especially amid U.S. tariff measures—were among the key factors driving supplier price increases.
Egyptian Firms Raise Selling Prices
Fewer private sector firms in Egypt reported a drop in sales, but purchasing activity was reduced at the fastest rate in seven months. Employment levels also declined for the fourth consecutive month.
On the other hand, firms raised their selling prices at the sharpest pace in seven months, driven by the fastest input cost inflation since the beginning of the year. Companies attempted to pass some of these rising costs on to consumers. Input costs rose across various categories, including fuel, cement, and paper. Currency fluctuations, particularly against the U.S. dollar were cited as a major source of cost pressure. Meanwhile, wage expenses rose only slightly.
Urban inflation in Egypt accelerated to 13.9% year-on-year in April, up from 13.6% in March. The increase was fueled by successive hikes in fuel and essential service prices, further straining the purchasing power of citizens already struggling with rising living costs.
Improved Outlook for Egypt’s Private Sector
Despite the contraction, expectations for Egypt’s non-oil private sector over the next 12 months improved, though they remain weak by historical standards. Some firms noted that persistent price pressures and subdued demand continued to weigh on production forecasts.
