Egypt’s non-oil private sector continued to face significant operational challenges in May 2026, marking the fifth consecutive month of contraction.
According to the latest S&P Global Purchasing Managers’ Index (PMI), the headline figure remained below the critical 50.0 neutral threshold, edging up slightly to 47.1 from 46.6 in April.
Analysts highlight that persistent inflationary pressures, coupled with subdued demand and ongoing supply chain constraints, are currently weighing on the nation’s economic output.
Fragile consumer demand remains a primary concern, as new orders continued to decline for the fifth straight month.
High price levels have severely restricted customer spending, leading to a sharp drop in business inflows.
While the overall output downturn persists, sector-specific performance remains mixed; wholesale, retail, and services are bearing the brunt of the contraction, whereas manufacturing and construction have shown signs of a mild recovery.
Compounding these difficulties, businesses are grappling with the fastest rise in input costs since early 2023.
Factors such as increased fuel and electricity prices, currency depreciation, and record-high wage inflation—the strongest since 2018—have forced firms to pass costs on to consumers through rapid price hikes.
In response to these fiscal pressures, companies have opted to reduce their workforce, with employment levels seeing their sharpest decline since June 2020.
As regional uncertainties persist, economists warn that these factors could dampen GDP growth throughout the second quarter.
