Egypt business activity shrinks in July after subsidy cuts -PMI

Business activity in Egypt shrank in July, a survey showed on Tuesday, in a sign the economy remains fragile after cuts to energy subsidies last month led to lower demand and higher prices.

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

The government is walking a fine line in an attempt to boost revenues and cut its deficit while luring investors.

The HSBC Egypt Purchasing Managers Index (PMI) for the non-oil private sector stood at 49.0 points in July, down from a six-month high of 51.5 points in June. Readings above 50 indicate expansion, while those below 50 point to contraction.

"It's a disappointing reading, underscoring the scale of the challenge policymakers face as they try to bring the Egyptian economy back to life," said Simon Williams, Chief Economist for the Middle East at HSBC.

"The July numbers may also capture the first effects of last month's subsidy cuts which seem to have not just lifted prices but hit demand, too."