Arab Finance: Egypt’s headline Purchasing Managers’ Index (PMI) jumped to a seven-month high in August 2026, recording 49.6, easing the downturn from 46.8 in July, according to the latest report issued by S&P Global.

Non-oil business showed encouraging signs of stabilization, with business conditions deteriorating only marginally after seven consecutive months of contraction.

The improvement was broad-based, with softer declines in both output and new orders, whilst employment rose at a near-record rate and business confidence reached its highest in over four years.

During the month, the drop in output and new orders eased, while business confidence climbed to its highest level in more than four years. Employment also recorded a significant turnaround, rising for the first time since October 2025.

However, inflationary pressures intensified in August after easing significantly in June and July. Businesses also reported material shortages and liquidity constraints, which contributed to weaker purchasing activity.

Purchasing activity contracted for the fifth consecutive month, with the rate of decline reaching its steepest level in nearly three years. Around 29% of companies reduced their purchases during the month, more than twice the share that reported increases.

David Owen, Principal Economist at S&P Global Market Intelligence, said: "Over the past few months, we’ve seen business confidence return – expectations are now the highest seen in over four years – which has certainly helped the domestic economy to rebound. Firms were sufficiently encouraged to resume hiring, resulting in an increase in employment that was the second-fastest in the survey’s history.

"Moreover, this was all achieved despite a slight uptick in input cost inflation in August, linked to the recent rebound in global oil prices, although we may see a lagged effect on business activity if customers respond negatively to the sharp increase in output charges,” Owen added.

He stated: "The leading nature of the PMI data means that we may still see a slowdown in GDP growth in the upcoming figures for the second quarter, but the outlook for Q3 looks more encouraging, with the latest PMI reading historically consistent with a year-on-year growth rate of approximately 5%.”