Egypt business activity shrinks for 12th month

Egyptian business activity shrank for the 12th straight month in September as both output and new orders fell, a survey showed on Wednesday.

Most of Egypt has been under nighttime curfew since mid-August, when security forces broke up sit-ins of supporters of President Mohammad Mursi, deposed by the army on July 3.

More than 1,000 people died in clashes in July and August between security forces and Mursi supporters.

The seasonally adjusted HSBC Egypt Purchasing Managers Index (PMI) for the non-oil private sector stood at 44.7 points in September.

That was up from 42.2 in August, the third-lowest reading since the survey began in April 2011, but still well below the 50 mark separating growth from contraction, the survey of around 350 private sector firms showed.

“It’s a disappointing reading that underscores how long and difficult Egypt’s road to recovery may prove to be,” Simon Williams, chief Middle East economist at HSBC, said in a statement accompanying the poll results.

“Support from overseas can offer the currency some immediate relief, but as this month’s PMI shows, it will take more fundamental changes inside Egypt itself for private sector activity to normalize.”

Saudi Arabia, Kuwait and the United Arab Emirates pledged Egypt $12 billion in aid days after Mursi’s removal and have indicated they are prepared to send more.

The contraction in output eased somewhat in September, with the related subindex rising to 42.1 from 36.5 in August. The last time both business activity and output grew was in September 2012.

The decline in new orders also slowed last month, with the subindex improving to 41.7 from August’s 36.3. The export orders gauge also came to 41.7, rising from 35.1 in August, which was the greatest contraction since December.

But businesses cut staff at a faster clip, with the employment index slipping to 46.5 last month from 47.8 in August, the survey showed.

Companies trimmed their output prices very slightly, with the related index inching down to 49.5 from 50.2 in July, moving in a tight range for the fourth month in a row. Egyptian annual consumer inflation slipped to 9.7 percent in August from a two-year high of 10.3 percent a month earlier.