Non-oil private sector business activity shrank for the third month in a row in December, a survey showed, albeit at a slower pace than the previous month as the contraction in output, new orders and employment eased. In a survey, the Emirates NBD Egypt Purchasing Managers Index (PMI) rose to 48.2 points in December from a two-year low 45 points in November, remaining below the 50-point mark that separates growth from contraction. Output levels dropped for the third month, with an index reading of 48.2 points in December, but the rate of decline was less than November's 42.7, the survey said, adding that nearly 24% of panelists noted a drop in output, with a number pointing to the fragility of client demand. New orders also fell for the third straight month, albeit at the slowest rate in as many months. The survey showed declines in employment for the seventh consecutive month to 46.5 points in December compared with declines of 45 points the month before. "Although easing since the prior month, the rate of job cuts remained solid overall. Staff retirements contributed to the fall in payroll numbers, while some workers left in order to search for better job opportunities," the survey said.   Our comment: Private sector activity continues to face a challenging external environment – mostly related to deteriorating security conditions in key export markets – therefore being primarily driven by domestic demand. The latter is also being faced with challenges of FX shortages, rising inflation and slowing domestic demand. We expect the same growth patterns to hold in 2016, with exports still facing challenges and domestic demand remaining driver of growth. In a wider sense, public investment will also remain a key driver of growth. We have downgraded our real GDP growth forecasts recently to 3.7% from an earlier 4.5%, in light of the expected drop in tourism revenues, following the crash of the Russian airplane, in addition to rising inflation. (Reuters, Mohamed Abu Basha)