A general view of City Star, Egypt's largest mall, in Cairo (Photo: reuters)
Business activity in Egypt's private sector, excluding oil, shrank for the fifth month in a row in May but edged closer to expansion as employment rose, a survey showed on Wednesday.
The HSBC Egypt Purchasing Managers Index rose to 49.9 in May, almost touching the 50 mark, above which signals growth in activity. The index rose from 49.8 in April.
"Latest PMI data for Egypt highlighted a further worsening in business conditions during May, led by a stagnation in new orders," Markit economist Philip Leake said.
"However, the rate of contraction was negligible, with expansions in output and employment suggesting that the headline index could signal improvement in the near future."
Employment rose for the first time in six months, with some companies saying they raised staffing levels because of new projects.
President Abdel Fattah El-Sisi has pledged to reduce joblessness to 10 percent over the next five years. It stands at 12.8 percent according to the government's statistics agency, but analysts believe actual unemployment may be higher.
Sisi faces pressure to deliver more jobs for Egypt's rapidly growing and youthful population of about 90 million.
The survey showed that new orders were stagnant in May, which led to an only marginal increase in output.
Respondents said a lack of stability in key export markets across the Middle East led to a solid decline in new work from abroad.
Input costs continued to increase in May, driven up by the weak Egyptian pound versus the U.S. dollar. Output charges fell as companies attempted to attract clients.
"Companies saw their pricing power diminish in May, as output charges fell at the fastest rate in more than three years," said Leake.
Egypt is aiming to attract billions of dollars in foreign investment as the government tries to turn around an economy battered by political and economic turmoil since a 2011 uprising.
An investment conference in March secured tens of billions of dollars in commitments and Egyptians are waiting to see results.