Egypt’s non-oil private sector exhibited signs of stabilisation in July, as employment experienced an increase for the first time in nine months, alongside a softer decline in output and new orders, according to the latest S&P Global Egypt PMI report. The headline PMI rose to 49.5 in July from 48.8 in June, remaining below the 50.0 threshold that delineates growth from contraction. Nevertheless, the index reached its joint-highest level in five months, indicating only a marginal decline in business conditions.
“Businesses … had the confidence to hire new staff, leading to an increase in employment for the first time in nine months, if only a fractional one,” stated David Owen, Senior Economist at S&P Global Market Intelligence, as quoted by Reuters. Employment rose as firms responded to indications of stabilising demand and increasing backlogs of work.
Output and new orders continued to decline, albeit at a softer pace than in June, with some firms reporting heightened activity amid tentative signs of recovering sales. The wholesale and retail sector remained the largest hindrance to demand and activity.
Input prices escalated at a quicker rate, driven by heightened costs for items such as cement and fuel, yet remained below the long-term trend. Selling charges increased for the third consecutive month, although the inflation rate was modest.
Despite ongoing challenges, optimism regarding future activity improved slightly from June’s record low, with firms expressing hopes for slower inflation and diminished regional conflict. However, overall confidence remained historically subdued.
The S&P Global Egypt PMI is grounded in a survey of approximately 450 companies across manufacturing, services, construction, and retail sectors, measuring variables such as new orders, output, employment, suppliers’ delivery times, and stocks of items purchased. A reading below 50 indicates contraction; thus, sustained readings beneath this threshold signal ongoing economic challenges in non-oil private activities.
Read more: Central Bank of Egypt maintains interest rates as GDP growth projected at 4.8 percent
Economic growth and interest rates
Egypt’s annual urban consumer price inflation skyrocketed to 16.8 percent in May, up from 13.9 percent in April, according to recent data released by the statistics agency CAPMAS. This surge in headline inflation surpassed Reuters’ median forecast, which anticipated a rise to 14.9 percent based on the analysis of 12 experts, primarily driven by a negative base effect.
Annual inflation has significantly decreased from a record high of 38 percent in September 2023, aided by an $8 billion financial support package signed with the IMF in March 2024.
The drop in inflation led the Central Bank of Egypt to reduce its overnight lending rate by 225 basis points to 26.0 percent during its meeting on April 17, followed by another reduction of 100 basis points on May 22. In May 2025, Egypt’s central bank cut its overnight interest rates by a less-than-anticipated 100 basis points, citing an acceleration in economic growth during the first quarter alongside a deceleration in inflation. The Monetary Policy Committee (MPC) adjusted the overnight deposit rate to 24 percent and the lending rate to 25 percent, marking its second reduction this year after maintaining steady rates for an entire year.
