CAIRO (Reuters) - Business activity in Egypt shrank for the 12th consecutive month in September, with output declining the most in five months and a weakening currency pushing up prices, a survey on Wednesday found.
The Emirates NBD Egypt Purchasing Managers' Index (PMI) for the non-oil private sector stood at 46.3 points, down from August's 47.0 points and well below the 50 point mark that separates growth from contraction.
"As well as marking a one-year downturn, the latest reading pointed to an accelerated contraction for the second straight month," said Markit, which compiled the data.
Egypt has struggled to revive its economy since a popular uprising in 2011 drove away investors and tourists, hitting inflows of foreign currency it needs to import raw materials and jumpstart its domestic industries.
The country reached a preliminary agreement with the International Monetary Fund in August for a three-year $12 billion loan programme aimed at plugging its financing gap and stabilising its currency market.
Jean-Paul Pigat, senior economist at Emirates NBD said the weakening currency and a value-added tax adopted recently as part of economic reforms had combined to push up prices and weigh on growth.
"While many of the economic reforms expected in Q4 will ultimately prove beneficial for long-term stability, in the near term they could result in a further deterioration in business conditions for the private sector," he added.
Headline inflation jumped to 15.5 percent in August, its highest in nearly eight years.
Egypt is widely expected to soon devalue its currency, which officially trades at 8.78 pounds to the dollar, to bring it into line with a black market rate that has hovered at around 14 pounds in recent days.
Other expected reforms include cuts to the bloated civil service and further slashes to subsidies in petroleum and electricity.
Weaker output and declines in new business continued to weigh on employment, which dropped for a 16th consecutive month in September, Markit said, adding: "The rate of job shedding was only marginally slower than August's survey-record."
Egypt's official unemployment rate was 12.5 percent in the second quarter.
(Reporting by Eric Knecht; Editing by Catherine Evans)