The unemployment rate in EG rose to 6.40% in November 2025, reversing a downward trend from 6.10% in August. This figure aligns exactly with market estimates but remains below the 12-month average of approximately 6.60%, reflecting a still relatively stable labor market. Over the past two years, the rate has declined from a high of 7.10% in November 2023, signaling gradual improvement despite recent volatility.

Drivers this month

• Seasonal layoffs in manufacturing and agriculture sectors contributed 0.15 percentage points.
• Service sector hiring slowed amid weaker domestic demand.
• Inflationary pressures reduced real wages, dampening labor participation.

Policy pulse

The current unemployment rate sits slightly above the central bank’s comfort zone, which targets a 6.00% threshold consistent with stable inflation. The rise may prompt cautious monetary policy adjustments, balancing growth and inflation risks.

Market lens

Immediate reaction: The EGP currency weakened 0.30% against the USD within the first hour post-release, reflecting investor concerns over labor market softness. Short-term government bond yields edged up by 5 basis points, signaling modest risk repricing.

EG’s unemployment rate is a critical macroeconomic indicator, closely linked to GDP growth, inflation, and consumer confidence. The 6.40% figure contrasts with a 6.10% rate three months prior and a 6.70% reading one year ago, underscoring a gradual but uneven recovery. Inflation remains elevated at 9.20% YoY, pressuring real incomes and employment dynamics.

Monetary Policy & Financial Conditions

The central bank has maintained a steady policy rate of 12.50% since mid-2025, aiming to curb inflation without stifling growth. Financial conditions have tightened slightly due to global rate hikes and domestic credit constraints, impacting hiring decisions.

Fiscal Policy & Government Budget

Fiscal stimulus has been moderate, with a 3.80% of GDP deficit forecast for 2025. Government spending on infrastructure and social programs supports job creation but is offset by revenue shortfalls linked to weaker tax receipts amid slower economic activity.

External Shocks & Geopolitical Risks

Global commodity price volatility and regional geopolitical tensions have increased uncertainty. Export demand has softened, affecting manufacturing employment. Currency depreciation pressures import costs, feeding into inflation and labor market stress.

Market lens

Immediate reaction: The EGP/USD exchange rate declined by 0.30%, while 2-year government bond yields rose by 5 basis points, reflecting increased risk aversion and expectations of tighter monetary policy.

Looking ahead, EG’s unemployment rate trajectory depends on several factors, including domestic demand, inflation control, and external conditions. We outline three scenarios with associated probabilities:

Bullish Scenario (30%)

• Inflation eases below 7% by mid-2026, boosting real wages and consumption.
• Fiscal stimulus intensifies, supporting job creation in infrastructure and services.
• Unemployment falls to 5.80% by Q3 2026.

Base Scenario (50%)

• Inflation remains sticky around 8-9%, limiting real income gains.
• Moderate fiscal support and stable monetary policy.
• Unemployment hovers near 6.30-6.50% through 2026.

Bearish Scenario (20%)

• External shocks worsen, including commodity price spikes and geopolitical tensions.
• Currency depreciation accelerates inflation above 10%, eroding purchasing power.
• Unemployment rises above 7% by early 2026.

Policy pulse

Monetary authorities face a delicate balance between curbing inflation and supporting employment. Fiscal policy flexibility will be crucial to mitigate downside risks.

EG’s labor market shows signs of fragility despite long-term improvement. The recent uptick in unemployment to 6.40% signals emerging challenges from inflationary pressures and external uncertainties. Policymakers must carefully navigate monetary tightening and fiscal support to sustain growth and job creation. Financial markets have reacted cautiously, with currency depreciation and rising bond yields reflecting risk concerns. Structural reforms targeting labor market flexibility and productivity remain essential for long-run resilience.

Key Markets Likely to React to Unemployment Rate

The unemployment rate is a key barometer for EG’s economic health, influencing several tradable markets. The following symbols historically track labor market shifts:

• EGX30 – EG’s benchmark stock index, sensitive to domestic economic conditions and employment trends.
• USDEGP – The USD/EGP currency pair, reflecting investor sentiment and capital flows linked to economic fundamentals.
• BTCEGP – Bitcoin priced in EGP, often a risk sentiment proxy in emerging markets.
• ALX – A major industrial stock in EG, correlated with employment in manufacturing.
• EURUSD – Euro to US Dollar, influenced by global risk appetite and indirectly by EG’s economic outlook.

FAQs

What does the latest EG unemployment rate indicate?

The 6.40% rate suggests a slight labor market softening after months of improvement, influenced by inflation and external shocks.

How does unemployment affect EG’s monetary policy?

Higher unemployment may limit rate hikes, but inflation pressures require cautious tightening to maintain price stability.

What are the long-term trends in EG’s unemployment?

Structural reforms and economic diversification are key to reducing unemployment sustainably below 6% over the next decade.

Key takeaway: EG’s unemployment rate rise to 6.40% signals emerging labor market challenges amid inflation and external risks, requiring balanced policy responses.