For the fifth time in the last six months, the manufacturing gauge in Africa’s red metal producer Zambia rebounded to positive territory as new orders outweighed waning business activity. Zambia headlined 50.3 in Purchasing Managers Index (PMI) resurrected from a January slide into contraction at 49.9 as omicron effects. (Fifty is the benchmark for expansion ->50 and contraction – <50).
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The Markit Economics report cites currency volatility as a source of cost push pressure scaling manufacturing costs. The currency quagmire remains a concern in the wake of a strong dollar environment in the wake of uncertainty in the global environment.
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“The combination of rising new orders and falling business activity led to an increase in backlogs of work at some companies. Others were able to keep on top of workloads, however, thanks to stability in staffing levels, meaning that outstanding business was broadly unchanged overall,” the report carried.
Further, the report revealed that despite the increase in new orders, companies posted a third successive reduction in business activity amid money shortages. Output decreased in the manufacturing and services sectors, but rose in agriculture, construction and wholesale & retail.
ENERGY PRICE RISKS FORECAST TO WEIGH ACTIVITY
Other risks forecast to weigh factor pulse include the Brent price rally exacerbated by rise in global demand post the COVID19 pandemic and autopsy effects of the Russian – Ukrainian war that has seen crude flirt with $119 a barrel highs. This will add to the already in costing cocktail of business ecosystem operational pressures.
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HOMOGENOUS PEER PERFORMANCE THEMES
Zambia’s peer performance was impacted by homogenous themes namely inflationary and currency volatility hurdles as they tried to shrug off omicron effects of January headline. Kenya and South Africa like Zambia rebounded to positive territory at 52.9 and 50.9 respectively while Ghana and Egypt remained in contraction (<50) at 49.6 and 48.1 respectively. Nigeria scaled to a new high of 57.3 but still grappled with cost pressure in supply chains linked to currency weakness.
The Kwacha Arbitrageur