CAIRO - Egypt's non-oil private sector business activity shrank at a slower pace in October as business confidence hit a 26-month high and contractions in output, new orders and employment all eased, a survey showed on Sunday.

The Emirates NBD Egypt Purchasing Managers' Index (PMI) for the non-oil private sector rose to 48.4 in October from 47.4 a month before but remained below the 50 mark that separates growth from contraction.

"Output, new orders and employment declined at a slower rate in October compared with September and new export orders increased on average last month, after declining in September," said Khatija Haque, Head of MENA Research at Emirates NBD.

"Encouragingly, business optimism in October was the highest in more than two years."

Output continued to decline in October, extending the current sequence of decline to 25 months, but improved from the previous month, with the related sub-index standing at 47.1, compared with 46.5 in September, the survey showed.

Sentiment towards future growth prospects reached a 26-month high of 80.2, up from 79.2 in September, however, with companies optimistic that the economy will stabilise and business investment increase.

Egypt's economy has been struggling to recover since a 2011 uprising scared away tourists and investors, two main sources of foreign currency, but a three-year International Monetary Fund programme is expected to help restore confidence.



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(Reporting by Ahmed Aboulenein; Editing by Catherine Evans) ((ahmed.aboulenein@thomsonreuters.com; +20 2 2394 8097; Reuters Messaging: ahmed.aboulenein.thomsonreuters.com@reuters.net))