Business pulse in Africa’s copper producer Zambia, slid back to 48.1 as measured by Purchasing Managers Index (PMI) from a previous months rebound of 50.4. (50 is the borderline between expansion and contraction). Against all odds, easing aggregate demand characterized the month of March on account of a slow down in factory orders which then put slowed the input supply side of thee manufacturing equation.
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Zambia’s manufacturing activity was expected to price in effects of the previous months fuel price cuts by the energy regulation board. Diesel prices were given an 8.34% reprieve to K13.42 pl which was expected to ease operational cost curves. Our analysts still expect the effects of the fuel price cut to be lagged as it will take a while before the effects transmit into the manufacturing sector.
We remain bullish that in the coming months, activity will pick up. Blips in the private sector performance curve are normal just like we saw China scare the world with 4 consecutive months of PMI’s below 50 but posted a positive headline for March.
BT Chief Market Analyst
In a telephone interview, an undisclosed economist said there was lack of clarity around pricing especially last month with sales tax replacing VAT impasse. This uncertainty could have potentially impacted the business environment. We cant rule that out he said.
“Output and new orders fell in the month of march with panelists attributing this to lack of money. The falling demand for inputs saw suppliers reduce their input prices. This has been passed on to consumers are evidenced by marginal increase in output prices at the end of March compared to February. The reduction in demand for inputs by the private sector has been evidenced by trading of the USD/ZMW pair in March. Most of the demand we have seen has largely been offshore.”
Stanbic Zambia Head Global Markets Victor Chileshe commented