Egypt’s Purchasing Managers’ Index (PMI) slipped back below the 50-point threshold in January, signalling a mild contraction in the non-oil private sector, despite activity remaining partly supported by external demand.
The S&P Global Egypt PMI for the non-oil private sector stood at 49.8 in January 2026, down from 50.2 in December, according to a report released on Tuesday, February 3. A reading below 50 indicates a contraction in activity, following a brief return to expansion territory at the end of last year. The index covers the manufacturing and services sectors, excluding hydrocarbons, and serves as a leading indicator of economic conditions.
This slight deterioration comes amid a slowdown in domestic demand. The report notes that companies continued to face persistent excess capacity, forcing them to adjust production volumes and operational strategies. Supplier delivery times and new orders showed signs of weakening, reflecting heightened caution among economic operators in a less supportive domestic environment.
Despite the overall decline, the report highlights the relative resilience of the non-oil private sector. Business activity continued to expand for the third consecutive month, marking the longest growth streak since late 2020. This momentum was mainly driven by robust foreign demand, which enabled exporting firms to sustain activity and partially offset the sharper slowdown in local sales.
In response to weaker domestic demand, firms focused on working through existing order backlogs. Outstanding business declined at the fastest pace in nearly three years, indicating increased reliance on previously accumulated workloads. This trend, combined with excess production capacity, led to a phase of labour caution, with Egypt recording its sharpest drop in employment in the surveyed sectors since late 2023.
At the same time, input purchasing activity slowed, reflecting tighter inventory management and cautious expectations for future demand. Cost pressures remained subdued, allowing firms to cut output prices for the first time since mid-2020, according to S&P Global. Despite these conditions, business sentiment remained cautiously positive, with managers expecting a gradual improvement in demand over the year ahead.
The S&P Global Egypt PMI is based on a monthly survey of 450 companies operating in industry, services, construction and retail trade. It aggregates five key components: new orders (30%), output (25%), employment (20%), suppliers’ delivery times (15%) and stocks of purchases (10%), providing a comprehensive snapshot of the health of Egypt’s non-oil private sector.
MK/Sf/lb/as/APA