Egypt’s private sector recorded the weakest business activity among eight major African economies in February 2026, as rising cost pressures and softer demand pushed the country’s Purchasing Managers’ Index (PMI) deeper into contraction territory.
Data from the latest S&P Global PMI survey, analysed by BusinessDay, shows the Arab nation’s headline PMI fell to 48.9 in February from 49.8 in January, marking the lowest reading in five months. Although still above its long-run average of 48.3, the figure remained below the 50-point threshold that separates expansion from contraction.
The PMI is widely regarded as a high-frequency indicator of economic momentum and typically mirrors trends in gross domestic product (GDP).
Despite the decline, the survey suggested that Egypt’s non-oil economy is still experiencing a modest underlying recovery. In January, Ghana recorded the weakest business activity despite record low inflation
“The February PMI data pointed to a slowdown in the Egyptian non-oil private sector as activity curtailed and new order volumes weakened,” said David Owen, senior economist at S&P Global Market Intelligence.
He noted that Egyptian firms were increasingly exposed to rising global commodity prices.
“Egyptian non-oil companies were notably exposed to the uplift in global commodity prices, with firms emphasising the impact of higher prices for oil and metals, resulting in the sharpest increase in business costs for nine months and hitting margins at a time when firms are reluctant to raise their selling prices.”
Owen added that companies will be keen to see commodity markets stabilise, as previous episodes of elevated input costs have typically constrained output growth.
The PMI survey is compiled from responses by roughly 400 private-sector companies across sectors and firm sizes, with results weighted according to their contribution to GDP. The index combines measures of output, new orders, employment, supplier delivery times and purchasing inventories.
According to the survey, all five sub-components of the country’ PMI weakened last month, reflecting softer demand and rising operational costs.
“A softening of demand conditions weighed on output, according to anecdotal evidence, while some panellists noted that increased cost pressures had inhibited business operations,” the report said.
New orders declined modestly across the manufacturing, wholesale and retail, and services sectors, while construction was the only sector to record an improvement.
The slowdown also affected employment dynamics, with firms reporting a third consecutive month of falling staff numbers, driven by both job cuts and hiring freezes.
Middle East tensions add fresh pressure
The weaker business activity comes as geopolitical tensions escalate in the Middle East following the joint US–Israeli operation that killed Iran’s Supreme Leader, Ayatollah Ali Khamenei, intensifying fears of a broader regional conflict.
The development has already pushed Brent crude above $83 per barrel, raising concerns over the economic impact on energy-importing economies.
Egypt is widely viewed as one of Africa’s most vulnerable large economies to an oil shock because it imports a significant share of its fuel needs. Sustained increases in global energy prices could widen the country’s import bill and reignite inflationary pressures, which had recently begun to ease.
Consumer price growth slowed to 11.9 percent in January, the lowest level in four months, after a series of economic reforms supported by the International Monetary Fund (IMF) helped stabilise the currency and improve foreign exchange conditions.
However, the multilateral lender has repeatedly warned that Africa’s second biggest economy’s recovery remains fragile and highly exposed to external shocks.
A prolonged energy price spike could therefore complicate Cairo’s reform momentum at a time when the country is projected to overtake South Africa as Africa’s largest economy by 2028, according to IMF estimates.
Regional comparison
Ghana, which had the lowest reading in January at 48.5, improved to 49.5, marking a two-month high but still remaining in contraction territory.
Zambia was the only other country to record a PMI below 50 during the month.
Elsewhere, business conditions strengthened across several African economies. Uganda retained the strongest expansion, followed by Nigeria, Kenya, Mozambique and South Africa.
Uganda sustains led in African PMI expansion
In contrast, Uganda recorded the strongest business activity among the economies tracked, with its PMI rising to 54.2 in February from 52.6 in January, the highest level in eight months.
The improvement was supported by stronger consumer demand, rising new orders and continued expansion in employment.
Data from the Uganda Bureau of Statistics showed that annual inflation slowed to 2.9 percent in February, down from 3.2 percent in January and the lowest level since November 2024.
According to Stanbic Bank, the improvement reflects strengthening domestic demand and increased purchasing activity among firms.
“The Stanbic Bank Uganda PMI returned to a healthy expansion in both output and new orders in February, supported by robust consumer demand,” said Christopher Legilisho, economist at Stanbic Bank.
He added that firms increased hiring and expanded inventories to meet stronger customer demand.
“While demand conditions have remained sturdy, prices have not come under much pressure. Headline inflation moderated to 2.9 percent year on year, suggesting the Bank of Uganda’s restrictive stance has been effective.”
