Egypt business activity expands in June, PMI hits 6-month high

Business activity in Egypt grew in June after three months of contraction, a survey showed on Thursday, a tentative sign the economy may be picking up after elections that catapulted former army chief Abdel Fattah al-Sisi into the presidency.

Egypt's economy has been hit by more than three years of political and economic turmoil after the 2011 uprising that toppled Hosni Mubarak after 30 years in power.

The government is walking a fine line in trying to boost revenues and cut the deficit while attracting investors.

The HSBC Egypt Purchasing Managers Index (PMI) for the non-oil private sector stood at 51.5 points in June, reaching a six-month high and rising from 48.7 in May. Readings above 50 indicate expansion, while those below 50 point to contraction.

The index had been below 50 for 13 months through October.

"It would be dangerous to read too much into a single month's data, but the June readings provide the first concrete signs that political stabilisation may finally be opening the way for an improvement in economic performance," said Simon Williams, Chief Economist for the Middle East at HSBC.

"The positive readings for output, new orders and purchases all point to a pick up in demand and in sentiment. The gains in salaries also suggest that the labour market may have finally started to turn."