Egypt’s private sector downturn deepens as PMI falls to 46.0

CAIRO – 8 July 2026:  Egypt’s non-oil private sector continued to lose momentum in June, as the S&P Global Purchasing Managers’ Index fell to 46.0, down from 47.1 in May 2026.

The index remained below the neutral 50.0 threshold for the sixth month in a row, recording its weakest reading since January 2023.

The latest decline signals a sharper deterioration in operating conditions across Egypt’s non-oil economy and suggests that annual GDP growth could slow to around 3.8 percent by the end of the second quarter.

The PMI is a composite indicator that tracks the performance of the non-oil private sector through new orders, output, employment, suppliers’ delivery times, and stocks of purchases. It is widely used as an early gauge of economic activity.

According to the report, demand weakened significantly in June, with new orders falling at the fastest rate since November 2022.

Around 27 percent of surveyed companies reported lower sales, compared with 11 percent that saw growth. Businesses linked the decline to weaker client liquidity, raw material shortages, slower supply chains, and higher prices.

Non-oil business activity also contracted for the fifth consecutive month, with the pace of decline reaching its sharpest level since early 2023. Employment continued to fall, though job losses eased slightly compared with May.

Companies said the reduction in staffing was mainly driven by natural workforce attrition rather than active layoffs.

Purchasing activity also declined during the month. However, firms still increased their inventory levels as they looked to protect themselves against expected price increases and continued supply disruptions.

Supplier delivery times lengthened noticeably, although at a slightly slower rate than in May. Companies pointed to raw material shortages, shipping disruptions in the Strait of Hormuz, and higher fuel prices as the main pressures.

Inflationary pressures remained high in June, but eased considerably from May’s near-record levels. Output price inflation slowed sharply, while input cost inflation also moderated.

Businesses said the conflict in the Middle East continued to push up fuel and raw material costs. Wage pressures also remained elevated, with staff costs rising at the second-fastest pace since January 2018.

Despite the difficult operating environment, expectations for future output stayed stronger than the levels seen earlier in the year.

Some firms expressed optimism that conflict-related disruptions would ease and that government support would increase. However, overall business confidence softened slightly compared with May.

David Owen, economist at S&P Global Market Intelligence, said the conflict in the Middle East had placed severe pressure on Egypt’s non-oil private sector, noting that the drop in new business was the sharpest in more than three and a half years.

He added that the PMI contraction reflected ongoing inflationary pressures, as higher prices continued to weigh on customer spending.

Owen said that if global energy prices decline and regional tensions ease, inflation could continue to slow, helping support an improvement in output expectations.