Egypt’s Purchasing Managers’ Index (PMI) remained unchanged at 47.2 in October, marking its tenth consecutive month below the 50-point threshold that separates expansion from contraction. The reading also remained below its long-term average of 48.2, according to the latest report from S&P Global.

Egypt’s non-oil private sector experienced a sharper downturn in October, with output and new orders declining at their fastest pace in four months, driven by weak domestic demand and ongoing disruptions to trade and supply chains stemming from conflicts in the Middle East.

The report showed that both output and new business fell at their steepest rates since June, as companies reported subdued customer demand amid sluggish market conditions, rising prices, and declining purchasing power. External demand was also affected by geopolitical tensions across the region.

Heightened uncertainty prompted businesses to reduce their purchases of production inputs. However, stocks of purchased materials increased for the first time since June, as some firms built precautionary inventories to protect against potential price increases.

Supply chain performance also deteriorated, with supplier delivery times lengthening to their greatest extent since June, reflecting disruptions to maritime shipping, material shortages, and customs clearance delays.

In the labor market, employment returned to contraction in October, ending two consecutive months of growth. Although job losses were marginal, outstanding business volumes declined for the first time since January.

Business confidence regarding activity over the next 12 months fell to a seven-month low, reflecting persistent concerns over regional conflicts, inflationary pressures, and supply chain disruptions.

Meanwhile, input cost inflation accelerated to its highest level since May, driven by rising import, energy, and shipping expenses, alongside exchange rate pressures against the US dollar. Higher labor costs, resulting from wage adjustments aimed at offsetting rising living expenses, added further pressure on businesses.

As a result, companies raised their selling prices at the fastest pace since June, passing part of their increased operating costs on to customers.