Petroleum price pressures persisted in the month of April offsetting private sector activity despite the Purchasing Managers Index (PMI) headlining 50.5 from 49.6 previous month. According the Markit Economics April release on Zambia, the PMI reading reflects a marginal improvement in business conditions as output and orders rose slightly. 50 remains the benchmark for expansion (>50) and contraction (<50).
However, rising fuel prices did negate manufacturing and construction momentum, scaling purchase prices to 10 month highs. Business confidence ebbed to 14 month lows. Despite the energy regulation board adjusting fuel prices lower for May, April ruling prices were somewhat elevated as Zambia continues to bear the brunt of rising crude prices, an autopsy of the war in Eastern Europe – between Russia and Ukraine that has impacted the supply and demand side of the oil markets. This has kept crude prices north of $100 a barrel which has bearish implications of pump prices for importers like Zambia.
Inflationary and price pressure remain a persistent and homogenous theme across Zambia’s peers with most of them in contraction. Egypt’s PMI readings were below 50 at 46.9 from 46.6 as inflation pressure continues to curb the non-oil economy while Kenya is grappling with rising living costs that are stalling the economy. The East African giant slid into contraction at 49.5 from 50.5 previous month. Ghana’s demand remains hard hit with April PMI still in the doldrums at 48.3 from 47.2 as South Africa’s floods and load management impacted supply side of the economy. SA’s headline print slowed marginally to 50.3 from 51.4 previous month.
The Kwacha Arbitrageur