Egypt's non-oil business activity falls to 40-month low as costs rise

Business activity in Egypt shrank in November, with the deterioration picking up pace for the fourth consecutive month, as weakness in the pound currency raised costs and hit output, a survey showed on Monday.

The Emirates NBD Egypt Purchasing Managers' Index (PMI) for Egypt's non-oil private sector dropped to a 40-month low of 41.8 in November, edging down from 42 in October and far below the 50 mark that separates growth from contraction. Egypt's central bank abandoned its peg of 8.8 pounds to the U.S. dollar on Nov. 3, in a move aimed at attracting capital inflows and ending a black market for dollars that had all but crippled the banking system.

The move was largely welcomed by businesses, which had struggled to obtain dollars amid strict capital controls, and helped Egypt clinch a $12 billion loan from the IMF. But the currency has since depreciated to 17.8 against the dollar.

"The ongoing downtrend evident in November’s survey highlights that there will be no quick fixes to Egypt’s economic difficulties, even following the EGP devaluation earlier in the month," said Jean-Paul Pigat, senior economist at Emirates NBD.