Egypt's private sector stays in contraction mode in November

The rate of decline was the lowest in the last three months of shrinking growth

Egypt is currently implementing reforms as part of a three-year $12 billion aid package extended by the International Monetary Fund in 2016. Reuters

Egypt’s private sector remained in contraction mode in November, but the pace of decline was the lowest in the last three months, according to a survey published on Thursday.

The seasonally-adjusted Emirates NBD Egypt Purchasing Managers’ Index, a composite indicator that gives an overview of operating conditions in the non-oil private sector economy, rose to 49.2 in November from 48.6 in October, the lender said.

A reading above 50 signals growth, while a reading below 50 indicates contraction.

"The recovery in the headline PMI in November to a three-month high is encouraging, although the overall survey still points to soft business conditions for the private sector in Egypt," said Khatija Haque, MENA Economist at Emirates NBD. "Although the declines in output and new work were relatively modest, the employment index fell to its lowest level since March. More positively, inflationary pressures appear to be easing."

Egypt, Africa's third largest economy, is currently implementing reforms as part of a three-year $12 billion aid package extended by the International Monetary Fund in 2016. The measures include hiking energy, electricity and transport prices, floating the pound and containing the fiscal deficit.

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The halving of the pound’s value and the reforms pushed inflation to a three-decade high of 31.5 per cent in May. However, inflation has since eased to 17.7 per cent in October.

The private sector activity was impacted by low new orders and exports, while employment fell at the quickest rate in 12 months, the survey showed.

“The downturn was led by a further decline in new orders during November, as Egyptian firms found that challenging economic conditions continued to weigh on demand. However, the drop in orders was slower than in October and only marginal overall,” the lender said. “Similarly, output contracted for the third consecutive month but at a weaker