Manufacturing pulse in Africa’s red metal hotspot slid infinitesimally further into contraction for the month of November. Shriveling for the second time after 4 months straight of expansion, purchasing managers index headlined 49.0 from 49.1 in the previous month as reported by Markit Economics.
“Money shortages across the economy led to a further deterioration in business conditions in the Zambian private sector during November, with output and new orders both down for the second month running. In turn firms reduced their purchasing activity and employment,” the Markit Economics November release carried.
Despite money shortage hurdles, the red metal producers inflationary posture remains relatively contained compared to peers. The Southern African nation recently had its application for financial assistance approved by the International Monetary Fund which has to some degree boosted confidence in the economy. Debt restructure delays continue to breed uncertainty that has kept investors on the fence which could weigh the foreign currency and interest rate markets which coupled with the current state of the global economy could escalate input costs. Other upside risks to manufacturing include fuel price volatility as currency depreciation pressure persists and global crude prices continue to seesaw.
Compared to its peers Kenya expanded to 50.2 as business activity thrives while despite energy woes in the continents most industrialized economy South Africa the index rose to 50.6 (the first expansion in 3 months) as price pressures started to ease. Currency depreciation breeding cost push pressures continued to brunt Egypt’s manufacturing pulse which remained in contraction at 45.4 as the central bank of Egypt hiked rates 200bps. Ghana’s factory pulse remains in the woods at 44.9 as the cocoa producers grapples with an economic storm amidst fiscal turbulence. Nigeria leads the manufacturing expansion space for 29 consecutive months headlining 54.3 in November but weighed in part by a rising inflation trajectory.
The Kwacha Arbitrageur