Egypt’s non-oil private sector maintained its expansionary trend in January 2026, recording growth for the third consecutive month, according to the latest S&P Global Purchasing Managers’ Index (PMI). While overall demand moderated slightly, the continued increase in output highlights the resilience of the sector and its contribution to economic diversification beyond the oil industry.
The headline seasonally adjusted PMI for Egypt fell marginally from 50.2 in December 2025 to 49.8 in January, signalling a slight weakening in operating conditions. Despite this, the index remains above its long-run average and is consistent with a sustained pace of non-oil GDP growth. Using the S&P Global PMI formula, a headline reading of 32.0 corresponds to zero annual GDP growth. January’s reading, therefore, continues to indicate positive expansion in the broader economy.
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The moderation in demand was reflected in a reduction of backlogs, with firms using the opportunity to fulfil outstanding orders. This was the fastest decline in work backlogs since early 2023, prompting several companies to leave positions vacant. As a result, employment in the sector declined at the sharpest rate since October 2023, reflecting expectations of spare capacity going forward.
Alongside employment adjustments, companies scaled back purchases modestly after ten months of growth, although stocks of purchases increased for the first time since September 2025. This indicates a cautious but measured approach to inventory management in the face of slowing new orders.
January marked the first reduction in prices charged by non-oil companies since mid-2020. This development was underpinned by easing cost pressures, with both input costs and staff expenses rising at a slower pace compared to December 2025. Some firms noted higher prices for metals and fuel, yet the overall rate of input price inflation remained subdued.
Senior Economist David Owen of S&P Global Market Intelligence noted: “The softening of cost pressures has enabled firms to reduce charges for the first time in five-and-a-half years, which may bolster client confidence and stimulate spending.”
While output rose, some firms cited stronger demand from abroad as a key driver. Others, however, reported a slight decline in order volumes relative to December 2025. This duality highlights the sector’s dependence on both domestic and international markets, suggesting that global trade conditions continue to play a significant role in shaping Egypt’s non-oil growth trajectory.
Looking ahead, non-oil firms in Egypt remain cautiously optimistic about activity levels over the next twelve months. Expectations are positive but tempered, reflecting uncertainties in demand both domestically and internationally. The sector’s trajectory will likely depend on continued stability in global markets, foreign investment inflows, and domestic policies aimed at economic diversification.
Egypt’s non-oil private sector is increasingly pivotal to the country’s broader economic ambitions. By expanding beyond hydrocarbons, Egypt aligns with regional trends in North Africa and the Middle East, where governments are seeking to mitigate oil dependency and strengthen manufacturing, services, and trade. The sector’s growth, even amid easing demand, underscores its potential to contribute to GDP expansion, employment creation, and sustainable development.
Egypt’s continued expansion in non-oil output demonstrates that the economy is navigating challenges effectively, balancing growth with cautious resource management.
Sustaining Momentum Amid Challenges
Egypt’s non-oil private sector illustrates a measured but resilient pattern of growth. Despite a slight dip in demand and employment adjustments, the sector’s output continues to rise, costs remain contained, and stock levels are stabilising. For policymakers, investors, and business leaders, these trends offer a clear message: Egypt’s economy is diversifying successfully, but sustained expansion will require careful monitoring of both domestic conditions and global market dynamics.
