Egypt’s non-oil private sector records best performance in 4 years with January PMI at 50.7

According to the latest business survey, Egypt's non-oil private sector expanded in January, marking its best performance in over four years and its first growth since August of last year, primarily driven by increased output and sales. S&P Global's Purchasing Managers' Index (PMI) rose from 48.1 in December to 50.7 in January, indicating renewed signs of improvement in the sector at the start of 2025. A PMI reading above 50.0 indicates growth, while a reading below that level indicates contraction.

The PMI figure for January is the highest since November 2020, mainly boosted by improved domestic market conditions and easing cost pressures, which helped stimulate sales. However, the sustainability of this upward trend remains uncertain, putting pressure on business expectations and hiring. Companies remain cautious about the future economic situation and are closely monitoring market dynamics.

David Owen, Senior Economist at S&P Global Market Intelligence, stated, "A ceasefire agreement between Israel and Hamas may have boosted market confidence in January." However, he also noted, "Despite this, business expectations for activity over the next 12 months remained subdued, signaling that firms are still uncertain about long-term economic stability." This uncertainty underscores the need for continued monitoring of geopolitical and economic factors.

The output sub-index climbed from 47.1 in December to 51.1, while the new orders index rose from 46.4 to 51.3. Despite the positive start to the year, businesses remain cautious about future activity, with expectations declining to near-historic lows. Employment levels stabilized after two months of layoffs, but hiring remains limited. The future output expectations sub-index fell from 53.8 in December to 52.8, reflecting this cautious outlook.

Cost pressures have fallen to their lowest point in eight months, with input price inflation slowing. This has allowed companies to only slightly increase output prices, marking the most modest increase in four and a half years. While procurement costs in the construction sector have decreased, inflation rates in other sectors are lower than in December, indicating a broader trend of easing price pressures.