Egypt’s Non-Oil Business Activity Shrinks In October: S&P Global

November 7, 2023


Egypt’s Purchasing Managers’ Index (PMI) for the non-oil private sector sector fell to its lowest level in five months in October, S&P Global announced on Sunday.

Accordingly, Egypt’s PMI inched down from 48.7 in September to 47.9 in October, indicating a moderate deterioration in the activity of the non-oil private sector.

In its report on Egypt, S&P attributed this drop to the inflationary pressures that continued to affect demand conditions across the non-oil economy and drive weaker activity.

Moreover, the report said that companies made cuts to both staffing and inventories for the first time in three months, although expectations towards future activity improved.

Furthermore, supply-related challenges and the local currency weakness underlined another sharp increase in costs, albeit one that was much softer than the steep rates of inflation seen at the start of the year.

Since March 2022,  Egypt has devalued its local currency three times against the US dollar, which allowed the Egyptian Pound to lose over 75% of its value. The local market is anticipating a fourth wave of local currency depreciation, as adopting a flexible exchange rate is a key Egyptian commitment under the country’s $3 billion loan deal with the International Monetary Fund.

“The Egypt PMI pointed to the sharpest deterioration in non-oil business conditions for five months in October. A faster decline in new business volumes and sustained weakness in output were recorded as supply shortages and inflation continued to bite, leading companies to make their first reductions in staffing and stock levels since July,” said  David Owen, senior economist at S&P Global Market Intelligence explained.

“However, despite sliding from the levels seen in the third quarter of the year, PMI remained above the readings taken at the start of the year when inflationary pressures on companies were even steeper,” Owen added.

He also noted that while cost pressures are still sharp, they have moderated somewhat throughout 2023, providing some respite to companies, adding that business confidence picked up in October to the highest level in the year-to-date, implying some optimism that output could improve over the coming 12 months.

The report said that non-oil companies in the Egyptian market experienced another sharp increase in input costs during October, mainly driven by rising material prices and currency weakness.

Additionally, supply shortages were a key factor behind price rises, whereas wage costs increased only modestly.
“That said, the rate of overall input price inflation softened slightly for the second month running. Subsequently, average prices charged by non-oil firms rose solidly in October, but to the least extent since July,” according to the report.

Conversely, the report highlighted that in October, expectations for activity in the upcoming year saw their most positive outlook of 2023, rebounding from record lows earlier in the year.

Accordingly, non-oil companies were moderately hopeful of a recovery in economic conditions,
with 13% of respondents to the report’s survey expecting economic growth for the next 12 months.


S&P Global downgraded Egypt’s long-term sovereign credit rating in local and foreign currencies to B- from B in October, changing the outlook to stable. It also revised down the long-term credit ratings for three Egyptian banks; including two major state-owned banks, to B- from B. The actions came against the backdrop of the severe US dollar shortage the local market is suffering.