Egypt’s non-oil business activity continued to see expansion for the second month running — but at a slower pace — “marking the first back-to-back improvement in business conditions in over four years,” according to S&P Global’s latest Purchasing Managers Index report (pdf). Egypt’s headline figure dipped to 50.1 in February from a 50-month-high of 50.7 in January, which marked the second time the country's non-oil activity has hit the expansion territory since November 2020.

A solid start to the year: “Coupled with January's upturn, the data reflects the best opening two months of the year in the survey's history,” S&P Global Senior Economist David Owen said.

Input cost pressures “remained relatively soft” compared to what was seen in 2024, which indicates that “inflation is likely to continue its downward trend, in the near-term at least,” Owen said. While some respondents cited increased cost pressures to a stronger USD, this was partly offset by a decline in staff costs. However, cost pressures were more felt in the manufacturing and construction sectors. Meanwhile, selling prices rose at a gradual rate in February, as businesses looked to “limit the pass-through of higher cost burdens to clients.”

Employment decreased for the third time in four months, as businesses faced challenges in retaining staff and hiring more workers, representing another “mixed” outing for the employment market.

Overall business sentiment in Egypt remains subdued: Firms’ expectations for overall business activity over the next 12 months dropped to their lowest since last November, with just 5% of businesses surveyed showing positivity towards future output trends. “Economic and geopolitical risks continue to loom large, contributing to another month of subdued expectations for the year ahead,” according to Owen.

New orders levels: The continued growth in new orders was mainly driven by “recovery of market conditions and client demand” — however, the slowdown from January came as a result of a decline in manufacturing orders representing a “mild drag on overall performance.”

“We can’t call it the beginning of a trend just yet,” HC Securities’ Heba Monir told EnterpriseAM. “It doesn’t mean we’ve emerged from the bottleneck, but it does indicate that firms have been performing well despite higher costs of raw materials and input prices. The improvement is generally coming from higher consumer spending, which could both be driven by softening inflationary pressures and seasonal factors — but for the number to sustainably stay past the 50.0 mark, it would have to come through interest rate cuts and a recovery in consumer spending,” Monir said.

ELSEWHERE IN THE REGION-

  • Saudi Arabia’s PMI fell to 58.4 in February dipping down from the over decade-high reading of 60.5 in January as new business growth cooled slightly.
  • Kuwait’s PMI fell to 51.6 in February, down from 53.4 in January, still holding above the 50.0 mark for healthy growth.
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