Ahmed Kamel – Egypt Daily News
Egypt’s non-oil private sector continued to contract in August 2025, as weak demand and persistent inflationary pressures weighed heavily on business activity, according to the latest Purchasing Managers’ Index (PMI) report released by S&P Global.
The headline PMI reading dipped slightly to 49.2 in August, down from 49.5 in July. Although marginal, the decline marks the sixth consecutive month of contraction in the sector, as the index remains below the neutral 50.0 threshold that separates growth from decline.
The report highlighted that business activity and new orders declined across all monitored sectors, reflecting subdued client demand and ongoing inflationary pressures. Both output and new business fell at slightly faster rates than in July, though the pace of contraction remained milder than the historical average.
“August saw another challenging month for Egypt’s non-oil economy,” the report noted, citing continued softness in market demand and the dampening effect of high prices on consumer spending.
Despite the broader slowdown, there were signs of resilience in the labor market. Employment levels increased for the second consecutive month, following a prolonged nine-month period of stagnation. Businesses reportedly hired additional staff to bolster production capacity and reduce backlogs, although the overall rise in workforce numbers was marginal.
In a more positive development, input cost inflation eased significantly, dropping to its slowest pace since March and reaching the lowest level in nearly four and a half years. This easing of cost pressures helped narrow the gap between input price inflation and output price inflation, potentially providing companies with greater pricing flexibility moving forward.
The report suggests that while Egypt’s private sector remains under pressure, particularly amid ongoing structural and economic challenges, the stabilization of cost inflation and signs of hiring activity could point to cautious optimism about future recovery, provided that demand conditions improve.
Analysts continue to watch Egypt’s macroeconomic trajectory closely, especially in light of global financial conditions, local monetary policy, and broader efforts to attract investment and stabilize prices.
