The gauge for measuring manufacturing pulse has revealed that currency induced price pressures and lack of money in Africa’s second largest copper producer kept factory activity in contraction. According to Markit Economics purchasing managers index report, Zambia’s April PMI headlined 48.9 from 46.9 in the previous month. This was attributed to the kwacha slide earlier recorded coupled with lack of liquidity, a persistent theme in the red metal producers markets over the last few months. Readings above 50 signal expansionary, while those below reveal contractionary business activity.
“Companies continued to face challenging business conditions at the start of 2Q23, with money shortages again, the key factor behind falls in output and new orders,” the report carried.
Commenting on the survey results, Head Trader at Stanbic Bank Zambia Musenge Komeki said, the headline PMI posted a second consecutive reading below 50.0 however the pace of decline in business conditions softened compared to the previous month mainly due to the strengthening of the kwacha.
The currency in Southern African nation was a 122 day losing streak that extended into April before a 13.5% rally that saw reversal of some losses on news of debt restructure hope. The recent appreciation to some degree gave reprieve to price pressures but was outweighed by effects of liquidity bottlenecks.
Zambia peers such as South Africa continue to grapple with headwinds ranging from rolling blackouts and shortages that sent manufacturing into contraction at 49.6 from 49.7 while inflation eroded Kenya’s momentum to 47.2 from 49.2 previous month. In the north, Egypt’s factory activity softened to 47.3 from 46.7 as the non-oil economy faces inflation which is breeding input price pressures. In expansionary territory, Ghana saw quickened growth to 15 month highs with an expansion to 51.3 from 50.9 while Nigeria posted strong recovery to 53.8 from 42.3 in March supported by the easing of cash shortages despite weak sentiment. Price pressures remain homogenous across the continent.
The Kwacha Arbitrageur
