Zambia’s private sector pulse for May worsened deeper into contraction zone as tough business conditions exacerbated by the May currency slide weighed the cost of doing business. According to a Markit Economics press release, the copper producers Purchasing Managers Index – PMI printed a headline of 43.9 for May compared with 45.2 in the month of April. This is the steepest slump since October 2018.
Persistent headwinds such as lack of money in the economy, elevated input costs inflation continue to impact business pulse adversely.
With the rate of output inflation accelerating sharply to reach a 42 month high, it is no surprise that YoY inflation in May also rose to 8.1%, the highest rate in seven months.
Stanbic Bank Zambia Head Global Markets Victor Chileshe commented.
The recent currency slide that sent the Kwacha to a 3.5 year low pushed cost inflation to a 42 month high weighing output, new orders and employment levels. Zambia has in the last 8 months persistently been in the contraction zone with February being the only month manufacturing activity was out of the woods at 50.2. (50 is the borderline for expansion and contraction).
OTHER KEY AFRICAN BUSINESS PULSE RELEASES
SOUTH AFRICA: Africa’s most industrialized economy slide into contraction at 49.3 from 50.3 in April on the back of business uncertainty given political risks pre – election and generally tough business conditions. Future sentiment remains at 13 month high despite the state facing difficult challenge to heighten growth this year.
KENYA: Growth resumed in East Africa’s largest economy when it recorded its first increase in private sector pulse in 5 months with PMI readings of 51.3 from 49.9 in April. This is a recovery from the agriculture slow down experienced in the last few months. Government arrears payments to the private sector players has weighed business activity with the latest commitment to dismantle them forecast to brighten manufacturing outlook, Stanbic Bank Kenya Economist Jibran Quaresh commented.
MOZAMBIQUE: Mozambique has recorded increased foreign exchange flows and general cash inflows as part of borrowings to fund recovery of the cyclone effects. PMI readings of 52.3 were recorded from 49.9 in April. The recent Liquefied Natural Gas (LNG) in Rovuma basin has boosted business activity in the nation, Standard Bank Regional Economist Fausio Mussa commented.