CAIRO, Oct 6 – Egypt’s non-oil private sector recorded a sharper contraction in September as weaker demand weighed on output and new business, according to the latest S&P Global Egypt Purchasing Managers’ Index (PMI).
The headline PMI fell to 47.2 in September, from 49.6 in August, when the index reached a seven-month high. The latest reading was also below its long-term average of 48.2, indicating a more pronounced deterioration in operating conditions across the non-oil economy.
Businesses cited weaker customer demand, geopolitical disruptions and persistent inflationary pressures as key factors behind the slowdown. Both output and new orders declined at faster rates than in August.
Despite the broader contraction, companies increased employment for a second consecutive month, marking the first back-to-back expansion in staffing levels in more than a year.
The pace of job creation, however, remained modest and slowed from the previous month, suggesting that businesses remained cautious about expanding their workforce amid weaker demand.
Backlogs of work increased for a fifth consecutive month, indicating continued pressure on companies’ capacity to clear outstanding orders.
Businesses nevertheless remained optimistic about their output prospects over the next 12 months. Confidence weakened from August’s more than four-year high, however, reflecting the deterioration in current operating conditions and continued uncertainty.
Cost pressures remained significant during September, with businesses reporting increases in the prices of oil, metals, electricity and transportation.
Wage inflation provided some relief, easing to its lowest level in eight months. However, overall operating costs remained elevated, prompting companies to continue passing higher expenses on to customers through increased selling prices.
The rate of selling-price inflation eased slightly from August but remained well above the survey’s historical average, pointing to continued pressure on businesses and consumers.
Companies also reduced their purchasing activity for a sixth consecutive month as weaker demand prompted businesses to scale back input purchases.
Although the rate of contraction in purchasing was the weakest since May, lower input buying contributed to a third consecutive monthly decline in inventories.
The September PMI therefore points to renewed weakness across Egypt’s non-oil private sector, with demand and production under pressure even as employment continues to expand modestly and businesses retain a degree of optimism about the year ahead.
