- Employment in Egypt’s private sector contracted in November, marking the fastest decline since February 2024.
- This dip was largely attributable to companies opting not to replace departing staff due to weakened sales and subdued optimism.
- Across the industry, purchase prices of goods increased partly due to a stronger US dollar against local currency.
Egypt’s private sector continued to face persistent challenges in November, with a drop in employment levels reflecting waning optimism across industries. According to the latest S&P Global Egypt Purchasing Managers’ Index (PMI), economic uncertainty and weak customer demand stifled growth prospects for the North African country, forcing businesses to scale back hiring and purchasing activities.
The PMI climbed slightly to 49.2 in November from 49.0 recorded in October, marking the second consecutive month of improvement but still lingering below the critical 50.0 threshold that signals expansion.
Senior Economist David Owen noted that while the contraction rate slowed, it highlighted a strong degree of uncertainty clouding the market.
“Reductions in purchasing activity and employment hint that firms are not expecting capacity levels to be challenged too much in the months ahead. Lower sentiment towards future activity reflects a strong degree of uncertainty,” Owen explained.
Mixed sectoral performance across Egypt’s private sector
Egypt’s non-oil private sector saw its activity decline for the third consecutive month, primarily due to persistently weak customer demand.
While new order volumes continued their downward trend since July, some businesses reported modest improvements in new work, signaling isolated areas of recovery. Manufacturing stood out as a bright spot, with goods orders rising modestly, driving an increase in output.
“The manufacturing sector displayed signs of resilience, offsetting contractions in other areas like construction, wholesale, and retail, which remain under severe pressure,” Owen added. However, these gains were not enough to counterbalance declines in wholesale, retail, and services, which dragged down overall operating conditions.
Job cuts reflect wavering business confidence
New jobs in Egypt’s private sector contracted for the first time in four months, with the reduction marking the fastest decline since February, 2024, the survey shows. This dip was largely attributed to companies opting not to replace departing staff due to weakened sales and subdued optimism that continues to hurt activity.
The hesitancy in hiring aligns with a broader sentiment of caution. Output expectations for the year ahead were the second-lowest in the series’ history, reflecting businesses’ doubts about immediate economic recovery.
Input costs and inflationary pressures ease
Despite the challenges, some relief emerged on the cost front. In November, input cost inflation softened to a four-month low, mainly due to reduced wage pressures. At the same time, staff pay growth was at its slowest in 16 months, allowing businesses to moderate selling price increases.
However, purchase prices continued to rise, partly due to a stronger US dollar. Market projections show that between September 2023 and September 2024 the Egyptian Pound depreciated by as much as 36.22 per cent relative to the USD. This inflationary trend was most evident outside the construction sector, where average output prices showed a slight decline.
Lower cost pressures also contributed to improved delivery times, marking the first slight shortening in a year. While this provided some operational efficiency, businesses remained cautious, reducing input purchases to mitigate risks associated with excess inventory.
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Future Prospects: Lingering uncertainty for 2025
Looking ahead, the survey revealed muted optimism among Egypt’s private sector players. Business leaders cited uncertainties surrounding demand recovery and currency fluctuations as key factors dampening confidence. Firms were particularly cautious about increasing capacity, instead opting to manage resources conservatively.
“Although some firms reported improved order inflows, the overall sentiment reflects hesitation,” said Owen. “This underscores the need for policy measures to bolster private sector activity and address structural challenges.”
Elusive recovery
November’s PMI findings paint a mixed picture for Egypt’s private sector. While the pace of contraction in new orders and output slowed, job cuts and subdued confidence highlight persistent vulnerabilities.
As Egypt’s private sector grapples with these hurdles, the onus lies on policymakers and industry stakeholders to foster a conducive environment for sustainable growth. Whether these efforts can reverse the downward trends in time remains to be seen.
