Arab Finance: Egypt’s non-oil private sector contracted for the seventh consecutive month in July 2026, although the headline Purchasing Managers’ Index (PMI) rose to 46.8 from a 41-month low of 46.0 in June, according to the latest report by S&P Global.
Despite the monthly improvement, the index remained below the neutral 50.0 threshold, signaling a continued deterioration in business conditions at the start of the third quarter. The survey’s early readings were consistent with annual gross domestic product (GDP) growth of 4%.
New business intakes declined for the seventh month in a row due to stagnant market conditions, price pressures, delays in maritime shipping, and a shortage of new projects.
As order books weakened, companies reduced output, staffing, and purchases. The decline in business activity remained pronounced but eased to its slowest rate in four months, while job cuts moderated to a marginal pace.
Backlogs of work nevertheless increased at the second-fastest rate in nearly three years. The accumulation of outstanding business affected both personnel and raw materials, constraining production at some firms.
Purchasing activity recorded its steepest drop since September 2023, with around one-third of surveyed companies cutting input buying, partly in response to subdued demand. Pre-production inventories consequently fell for the first time in five months as firms maintained leaner stock levels amid liquidity pressures and limited material availability.
Supply conditions offered some relief, with vendor delivery times improving marginally for the first time since March as disruption to domestic supply routes stemming from the Middle East conflict eased.
Inflationary pressures also softened in July. Overall input costs rose at their slowest pace in six months and remained well below the historical average. Purchase price inflation weakened amid lower oil prices and a softer US dollar, although regional tensions continued to keep some costs elevated. Companies subsequently raised their selling prices at the slowest pace in four months.
While current conditions remained challenging, firms became more optimistic about the coming year. The Future Output Index reached its highest level since June 2022 after rising for the third time in four months, supported by improved expectations for customer demand. However, respondents indicated that the outlook remained dependent on regional developments and their implications for confidence and prices.
