Egypt’s private sector edges toward stability

Although still below the neutral 50.0 mark that separates expansion from contraction, the reading indicated the mildest deterioration in business conditions in three months.

The improvement came as contractions in output and new orders eased, suggesting fewer firms reported declining sales. However, the broader environment remained challenging.st

Companies continued cutting back operations, reducing purchases, and trimming staff for the fourth consecutive month to stay lean amid sluggish demand.

“Although many of the key PMI metrics continued to indicate a deterioration in business conditions in May, the overall pace of decline was not as sharp as in April and softer than the survey’s historical trend,” said David Owen, Senior Economist at S&P Global Market Intelligence.

“Nevertheless, a number of surveyed firms continued to report softness in market demand, leading them to cut back on purchases and staffing Weak market demand continued to pressure firms to scale back purchasing and employment.”

The report also flagged rising inflation. Input cost inflation hit a five-month high, driven by currency volatility—especially against the US dollar—and increased supplier charges. Higher prices for fuel, cement, and paper were frequently cited.

In response, firms raised selling prices at the fastest pace since October 2024, reversing April’s stagnation. Wage growth, however, remained modest, indicating that inflation was primarily cost-driven rather than wage-led.

Weaker demand led firms to reduce purchases at the fastest rate since October 2024, keeping inventories lean.

Employment declined again, though job losses were largely mild and often due to non-replacement of voluntary leavers.