The heath of Egypt’s non-oil private sector continued to improve in February, building on the upward trend that kicked off since the beginning of 2025. Firms reported an ongoing recovery in client demand, marking the first back-to-back improvement in business conditions in over four years.
The headline seasonally adjusted S&P Global Egypt Purchasing Managers’ Index (PMI) declined from a 50-month high of 50.7 in January to 50.1 in February. Nevertheless, with the index registering slightly above the 50.0 neutral threshold, it signaled a continued improvement in the health of the Egyptian non-oil private sector.
“Coupled with January’s upturn, the data reflects the best opening two months of the year in the survey’s history,” stated David Owen, senior economist at S&P Global Market Intelligence.
The sector’s recovery was also supported by another month of muted price pressures, with inflation of average cost burdens rising from January but remaining historically mild. Output prices were increased only modestly.
Volumes of new work rise for second month straight
A recovery of market conditions and client demand continued to play a major part in the return to new order growth, according to monitored businesses. Volumes of new work across Egypt’s non-oil sector rose for the second month straight after increasing only once in the prior 40 months of data collection.
However, the rate of expansion slowed from January and remained modest, with a decline in manufacturing orders acting as a mild drag on overall performance. Higher demand prompted firms to increase their purchases for the third consecutive month, with the latest upturn marking the sharpest increase recorded in 3.5 years.
“Stronger customer spending seems to have revitalized markets, driving higher sales volumes and supporting improved operating conditions. This positive momentum has led to increased spending among firms,” added Owen.
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Employment declines despite softer cost pressures
Businesses in Egypt’s non-oil sector also noted their efforts to secure new inputs as market conditions strengthened. However, they faced challenges in retaining staff and hiring new workers, resulting in an overall decrease in employment for the third time in four months.
“Price pressures are relatively low compared to those experienced in 2024, indicating that inflation is likely to continue its downward trend, in the near term at least. On the other hand, the employment market remains mixed at best, and the manufacturing sector is struggling to secure new orders. Economic and geopolitical risks continue to loom large, contributing to another month of subdued expectations for the year ahead,” Owen added.
Input cost pressures across Egypt’s non-oil sector remained relatively soft compared to the trends observed in 2024. While there were some reports of higher material prices driven by a strong U.S. dollar, resulting in a slight acceleration in purchase price inflation, this was partly offset by a decrease in staff costs. Cost pressures were more pronounced among manufacturing and construction firms compared to other segments.
Despite rising demand, firms remained cautious about the economic outlook. Expectations regarding business activity over the next 12 months slipped to their lowest since last November, with just 5 percent of firms showing positivity towards future output trends.
