For the month of August in Africa’s second largest copper producer, the gauge measuring manufacturing pulse showed a contraction for the first time in 4 – months. According to a Markit Economics report released in September, the Southern African nations Purchasing Managers Index (PMI) slid below the 50 mark to 49.2 from 51.2 previous month. (50 is the benchmark of expansion ->50 and contraction – < 50).
READ ALSO: What the FX Markets are Signaling about Zambia’s Manufacturing, Agribusiness and Economic Recovery
The reports cites some persistent themes ranging from lack of money and currency depreciation that scaled input prices higher. The red metal producer has grappled with foreign exchange supply as mining output slows at a time demand rises. With rising crude prices on the international commodity market as Russia and Saudi Arabia extend supply to the end of the year, coupled with supply – demand mismatches in the foreign exchange markets, factory momentum is expected to remain under pressure.
Key sectors that recorded declines include mining, manufacturing, construction offset by expansions in agriculture and the services sector. Barely a month ago, employment showed a one year high suggesting most corporates had hired more post COVID but took on higher wage costs in an era of economic recovery.
Zambia has quite a few headwinds predicted to the end of the year hinged on environmental threats in the name of El Niño weather expected to adversely impact agriculture output and energy generation. A potential twin energy complexity both on electricity and petroleum price pressures, input inflation is likely to be elevated to the end of the year.
COMPARED TO ITS PEERS
Kenya’s PMIs bounced back to positive territory after 5-months at 50.6 (45.2) as the political environment calmed and business conditions improved amidst price pressures. Africa’s most industrialized economy South Africa expanded to 51.0 for the first time in 6 months as private sector showed signs of recovery. Despite headlining below 50.0 at 49.2 a 2-year high, conditions in Egypt are improving as the economy shrugs off significant hurdles. With a 28-month high growth peopled Ghana’s factory activity to 51.9 from 50.5 previous month as Nigeria remained in expansion at 50.2 from 51.7 weighed by excessive inflation.
The Kwacha Arbitrageur
