Egypt private sector activity hits near two-year low

The non-oil private sector in Egypt experienced its sharpest decline in nearly two years during March, as regional instability drove up costs and weakened market demand. According to the latest survey results from S&P GLOBAL INC, the Purchasing Managers' Index (PMI) fell for the fourth consecutive month, dropping to 48.0 from 48.9 in February. This marks the lowest reading since April 2024 and remains below the 50.0 threshold that distinguishes growth from contraction. The downturn was primarily led by significant drops in output and new orders, both of which hit their lowest levels in approximately two years. Businesses frequently attributed the cooling demand to the ongoing conflict in the Middle East, which has intensified price pressures across the supply chain. In a notable shift, business expectations for the next 12 months turned negative for the first time, with firms citing the uncertainty of the war as a primary reason for their cautious outlook. David Owen, a senior economist at S&P Global Market Intelligence, noted that the current index level still suggests a resilient underlying economy. > The latest figure of 48.0 still relates to annual GDP growth of around 4.3%, and recent data suggests the domestic non-oil sector is on a solid underlying growth path. However, cost pressures continue to pose a significant challenge. Input prices rose at their joint-fastest pace in 18 months, driven by higher fuel costs and commodity price increases linked to the regional situation. These pressures were further exacerbated by the strength of the United States dollar. To compensate for rising expenses, companies increased their selling prices at the fastest rate in ten months, though the overall hike remained relatively modest.