Feb 3 (Reuters) - Egypt's non-oil private sector output grew for the third consecutive month in January, marking the longest period of expansion since late 2020, S&P Global reported on Tuesday, but demand conditions eased.

The headline seasonally adjusted S&P Global Egypt Purchasing Managers' Index (PMI) fell slightly to 49.8 in January from 50.2 in December, indicating a marginal weakening in overall operating conditions. A PMI reading below 50.0 suggests contraction, while above 50.0 indicates growth.

Despite that decline, the PMI remained above its long-term average, reflecting a robust pace of non-oil GDP growth. Output increased for the third month, driven by stronger demand from abroad, although domestic sales slipped slightly after two months of expansion.

The reduction in backlogs of work, the fastest in nearly three years, led to a significant decline in employment, the largest since October 2023.

"A note of caution was sounded by a decline in backlogs of work in January, which indicates that firms may have less room to expand in the coming months," said David Owen, Senior Economist at S&P Global Market Intelligence.

Companies also reduced their selling prices for the first time since mid-2020, as cost pressures eased.

Looking ahead, Egyptian firms remain cautiously optimistic, with expectations for activity levels over the next 12 months only marginally positive.

(Reporting by Reuters; Editing by Toby Chopra)