Egypt’s non-oil private sector sees deepest slump in eight months during December

Egypt’s non-oil private sector activity contracted for the fourth consecutive month in December, falling to 48.1 from 49.2 in November, according to S&P Global’s latest Purchasing Managers’ Index (PMI) Report (pdf). The reading marked the sharpest decline in business conditions since April, as rising input costs and subdued demand weighed heavily on activity, and takes Egypt further away from the 50.0 threshold separating growth from contraction.

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Output and new order volumes deteriorated at their fastest pace in eight months, as businesses struggled with challenging economic conditions and reduced client demand. Construction and wholesale/retail sectors were hit the hardest, while activity in the service sector remained relatively stable, the report shows.

The EGP weakened to above 50 per USD in December, driving up material costs and causing the fastest increase in input price inflation in three months. In response to rising input costs, companies withdrew heavily from their stockpiles, resulting in a decline in total inventories for the first time in six months. However, businesses kept output prices stable, choosing to reduce their margins to maintain sales.

Employment dropped for the second consecutive month, mainly due to not replacing departing staff, according to the report. Rising salary costs — linked to cost of living challenges — also added pressure.

On a positive note, the firms regained some confidence in future business conditions compared to November’s survey, which saw companies report one of the lowest levels of confidence on record. The non-oil private sector anticipates a stronger future output, as many firms see better domestic and geopolitical conditions in 2025. However, inflation and exchange rate fluctuations remain to be significant concerns, as S&P Global Market Intelligence senior economist David Owen noted that "the latest data shows that while the non-oil private sector’s anticipated recovery is unlikely to be without setbacks, businesses are still hopeful for improvements in 2025.”

The international press also took note of the report: Reuters.

ELSEWHERE IN THE REGION-

• Saudi Arabia’s PMI dropped to 58.4 in December (pdf), down from 59.0 in November, marking the first dip since August.
• UAE’s PMI rose to 55.4 in December (pdf), up from 54.2 in November, recording a nine-month high.
• Kuwait’s PMI dipped to 54.1 in December (pdf), down from 55.9 in November.
• Qatar’s PMI remained stable to 52.9 in December (pdf).