Egypt’s non-oil private sector contracts in December as cost pressures rise, PMI shows
2025.01.06 00:45
CAIRO (Reuters) – Operating conditions in Egypt’s non-oil private sector deteriorated in December, with output and new orders falling at the sharpest rates in eight months amid rising cost pressures, S&P Global reported on Monday.
The headline S&P Global Egypt Purchasing Managers’ Index (PMI) dropped to 48.1 in December from 49.2 in November, its fourth consecutive month of contraction. A reading below 50 indicates a decline in activity.
The downturn was attributed to subdued client demand and increased inflationary pressures, exacerbated by a weakening Egyptian pound against the U.S. dollar.
“The latest Egypt PMI data showed that the non-oil private sector’s anticipated recovery is unlikely to be without its setbacks in 2025,” said David Owen, senior economist at S&P Global Market Intelligence.
Businesses faced higher prices and a slump in demand, leading to the fastest decline in operating conditions since last April, he added.
Employment levels fell for the second month in a row, although the reduction was slight. Rising salary costs, linked to cost-of-living challenges, contributed to the decline in job numbers.
Input cost inflation accelerated, driven by higher material prices and an appreciating US dollar. Despite this, firms were less inclined to raise their own charges, tightening margins to maintain orders.
Non-oil companies were more optimistic about future activity, hoping for improved domestic and geopolitical conditions in 2025. The future output sub-index rose to 53.8 from 50.5 in November. Concerns about exchange rate volatility and price instability, however, could temper demand in the near term.
