Egypt's Purchasing Managers' Index Reaches Highest Level in 50 Months

The Purchasing Managers’ Index (PMI) published by S&P Global is a key indicator of economic performance in Egypt’s non-oil private sector. The latest report, released on February 4, 2025, shows a significant improvement in business conditions at the start of the year

The PMI rose to 50.7 points in January, up from 48.1 points in December 2024, marking the highest level since November 2020. This increase reflects growth in output and new orders, driven by improving market conditions and easing cost pressures. The data suggests a notable recovery for Egypt’s private sector after a prolonged period of economic contraction

Key Findings – January 2025

  Improvement in Output and Sales  

 The non-oil private sector recorded an increase in new orders, signaling rising demand in the domestic market

   Growth in output was the fastest since November 2020, indicating stronger business activity    

  Easing Inflationary Pressures  

  Input prices increased at a slower rate, reaching their lowest inflation level in eight months     

   Some businesses reported declining material costs, helping reduce overall price pressures

   Stable Employment Levels  

   No significant changes in employment were observed, as some businesses increased hiring while others reduced staff to cut costs    

This reflects uncertainty about long-term economic stability      

 Strong Performance in the Construction Sector

   Despite the impact of a strong US dollar on raw material prices, stable supply chains helped sustain productivity

    Minimal price increases in key raw materials contributed to cost stability  

 Impact of Geopolitical Developments     The truce between Israel and Hamas boosted market confidence, leading to higher business activity    

 However, businesses remain cautious about future growth prospects due to ongoing regional instability

Data Analysis and Future Outlook    

The PMI crossing 50 points indicates improving operating conditions, a positive shift after years of economic challenges       Companies increased their purchases of raw materials to support production, showing short-term confidence in market stability    However, business expectations remain weak, with firms hesitant to expand operations due to global and regional economic uncertainty

Challenges Ahead

Egypt’s non-oil private sector faces several challenges, including     Exchange rate volatility, affecting import costs

Ongoing geopolitical instability, which could deter foreign investments      Weak demand in export markets, limiting growth opportunities for manufacturers

Conclusion

The rise in PMI in January 2025 signals a positive start to the year for Egypt’s private sector, supported by higher domestic demand and lower cost pressures. However, business confidence remains fragile, with companies concerned about the sustainability of this recovery

While inflation is expected to continue declining, uncertainty in global and regional markets could slow economic momentum in the coming months