Zambia’s September private sector pulse as measured by Markit Economics/Stanbic- PMI detented to a headline on 48.8 a slight improvement from 46 (August). This follows an recovery in factory orders in the month. However, still in the doldrums for 12 months straight (below 50), Zambia’s manufacturing activity is forecast to be derailed by energy inflation headwinds on the back of effects of extended load management, high electricity tariffs and wider fuel prices. (50 is the benchmark for expansion and contraction)
The 2020 budget spells fiscal stimulus
Former central banker and now fiscal head Dr. Bwalya Ng’andu in his debut estimates of revenue and expenditure (budget) provided for fiscal stimulus to aid suppressed growth through zero rating key areas such as imports that point to machinery used for alternative energy generation to mention but a few. With a bottomed monetary policy, the central bank has little latitude to lower the benchmark interest rates as as such the onus is on the fiscals to accommodate the private sector stimulus.
Cost remain elevated with fuel a few basis points higher in the the last ERB review, energy (electricity) costs about to balloon wider and extended load management weighing business performance in an environment capped by tight liquidity.
Commenting on the September numbers, Victor Chileshe Head of Global Markets at Stanbic Bank said:
“Inflation and expected increases in energy costs will be the major headwinds that businesses will face despite signs of improvement in both output and new orders as business sentiment fell in challenging market conditions.”
PMI peer comparison
Growth in Ghana picked up to an eight month high at 51.4 from 50.7 (Aug) as new orders quickened to a 15 month high in Nigeria. Nigeria’s PMI rose to 57.1 from 56.4 (Aug). Kenya’s pulse rose from 52.9 (Aug) to 54.1 (Sep), signaling a solid improvement in the health of the Kenyan private sector. For the fifth straight month South Africa’s business conditions worsened to 49.2 from 49.7 (Aug). The Ugandan private sector remained in growth territory at the end of the third quarter of the year with PMI of 55.7 in September, down from 57.5 (Aug). ,