Egypt's PMI Rises to Seven-Month High in August

Egypt's non-oil private sector moved closer to stabilization in August. S&P Global released its monthly Purchasing Managers' Index on Thursday, showing a rise to 49.6 from 46.8 in July. The reading is the highest in seven months. It remains below 50.0, the threshold separating expansion from contraction, but points to only marginal deterioration.

The August figure follows seven consecutive months of weaker conditions across Egypt's non-oil economy, and the pace of decline is clearly slowing. New business continued to fall, but the drop was the mildest since February, and some companies said they saw signs that market activity was improving. Output also declined less sharply during the month, helped in large part by a much slower downturn in the service sector.

Survey data also showed a renewed uptick in prices. Inflationary pressures intensified in August, ending two months of cooling in June and July. Input costs rose at a slightly faster rate, which S&P Global linked to a rebound in global oil prices. Roughly 23 percent of firms reported higher purchasing costs, citing material prices, oil and transportation. Output charges also rose more quickly. David Owen, principal economist at S&P Global Market Intelligence, warned that sharply higher selling prices could have a delayed effect on business activity if customers respond negatively.

Material shortages and liquidity concerns were still prominent in the survey. In many cases, companies responded by reducing purchases. Yet there was a clear bright spot in the labor market. Employment increased for the first time since October 2025 and did so at a near-record pace. S&P Global noted that the workforce expansion could partly reflect an attempt to relieve capacity pressures that have built up over recent months. The rise in headcount was the second-fastest in the more than 15 years since the survey began. Wage inflation stayed steep, well above trend, as businesses lifted salaries in response to cost-of-living pressures.

August also brought a marked improvement in sentiment. Business confidence reached its highest level in more than four years, the strongest reading since June 2022. More than 21 percent of survey respondents expect growth over the next year, citing new projects, tourism expansion and branch openings. Owen said confidence has returned and expectations are at their highest level since 2022.

The index remains just below 50.0, yet Owen said the August level is historically consistent with year-on-year GDP growth of roughly 5 percent. Egypt's growth slowed in the second quarter, while the economy expanded 5 percent in the third quarter. The main risk is prices. They accelerated in August after two months of cooling, and sharp output-price increases could provoke a negative customer response before stronger hiring and confidence turn into sustained expansion.