Cairo — Egypt’s non-oil private sector deteriorated further in September, with output and new orders falling sharply as businesses faced persistent inflationary pressures and geopolitical disruptions, according to the latest S&P Global Purchasing Managers’ Index (PMI).

The seasonally adjusted PMI fell to 47.2 in September, from 49.6 in August, moving further below the 50-point threshold that separates expansion from contraction.

The decline reflected weaker demand and worsening business conditions. Companies reported faster falls in both output and new orders, citing subdued market conditions, geopolitical uncertainty and elevated inflation.

Export demand remains weak

Export sales also declined in September, although the drop was marginal and matched the slowest rate recorded during the current seven-month period of contraction.

Meanwhile, employment increased for a second consecutive month. It marked the first back-to-back rise in staffing in more than a year, although hiring slowed from August and remained modest.

Cost pressures continued to weigh on businesses. Input-cost inflation accelerated to a three-month high, while output price inflation eased slightly from August but remained elevated and significantly above its historical average.

Despite the difficult operating environment, companies remained relatively optimistic about their prospects, with firms expecting output to increase over the next 12 months.

“All this suggests that Egyptian firms remain hopeful about the future in spite of the economic challenges they face,” said David Owen, principal economist at S&P Global Market Intelligence.

Source:Reuters

Editing:Toby Chopra

Why it matters

Egypt’s non-oil private sector is an important indicator of underlying business activity and domestic demand. The sharper September contraction suggests that inflation, weak orders and geopolitical disruptions are still limiting growth, even as businesses continue to hire cautiously and maintain expectations of a recovery.

For policymakers and investors, the combination of weaker demand and rising input costs highlights the challenge of supporting economic growth while containing inflationary pressures.