Egypt’s Non-Oil Business Activity Reaches Three-Year High

June 6, 2024


Egypt’s non-oil private sector showed improvement in May, with the Purchasing Managers’ Index (PMI) rising to 49.6 from April’s 47.4, marking its highest level since August 2021, according to the latest data from S&P Global.

Despite remaining below the neutral 50-mark, the increase suggests a marginal decline in operating conditions. This indicates that non-oil private businesses in Egypt are nearing stability.

The PMI is a composite indicator that provides a snapshot of operating conditions in the non-oil private sector economy, considering factors such as new orders, output, employment, supplier delivery times, and stocks of purchases.

May’s data for the country also reflects a softening of inflationary pressures.

“After policy measures aimed at improving currency availability were announced in March, firms widely commented on greater price stability and stronger confidence over the latest survey period. Subsequently, new business levels fell at the slowest rate since September 2021, while new export orders increased for the second time in three months amid rising foreign demand,”according to the report.

In May, the Central Bank of Egypt (CBE) devalued the Egyptian Pound against the US dollar to its lowest rate in two years. Since March, the EGP has depreciated by over 60% against the greenback. Additionally, the CBE raised key interest rates by a total of 8% since the beginning of 2024, with 6% implemented on 6 March during an unscheduled MPC meeting.

Input costs

The report highlights that input costs increased at the slowest pace since March 2021, indicating a positive trend in inflation. It also notes that costs across the sector have fallen for the third consecutive month in May, reflecting a sustained positive impact from improved currency availability.

“Aided by lower market exchange rates as currency availability increased, purchase price inflation slid to its lowest level in four years, though there was a concurrent pick-up in wage cost burdens. The improvement meant that average prices charged by companies rose only slightly for the second month running,” the report explained.

The report highlighted that many business owners attributed lower costs to the decreased US dollar exchange rate in local markets, resulting in reduced prices for imported goods. Particularly noteworthy was the decline in purchase price inflation to its lowest level in four years, with the manufacturing and construction sectors even experiencing outright decreases in costs.

Easing inflation

Senior Economist David Owen from S&P Global Market Intelligence noted that May’s PMI reading of 49.6 indicated the beginning of a reduction in price pressures in the Egyptian non-oil private sector. He pointed out that the output and new orders metrics closed much of their gaps to the 50 growth threshold, suggesting a potential upturn in activity, particularly in the services and construction sectors, fueled by greater price stability boosting client spending.

However, Owen cautioned that despite these positive signs, certain sectors like manufacturing and wholesale & retail continue to experience downturns, indicating a lopsided recovery that may take more time to spread across the economy.


Despite this, Owen emphasized a promising outlook for Egyptian businesses, citing further easing in input cost inflation, which led to only a mild increase in selling prices. He noted that this should instill greater confidence in customers to spend. Additionally, Owen highlighted an uptick in business optimism and job levels, suggesting firms are anticipating an improvement in economic conditions.