Business confidence in Africa’s second largest red metal producer has continued to scale up given improved macros giving manufacturing costs an ebb. According to a Markit Economics survey for October, Zambias gauge for manufacturing health headlined 51.2 from 50.3 the previous month supported by lagged effects of currency appreciation which eased input costs for most manufacturers that eventually lowered their selling prices. Readings below 50 signal contraction while those above 50 signal expansion.
“Output returned to growth in October for the first time in five months. Although modest, the rate of expansion was the fastest in over three years. Anecdotal evidence suggested that a range of factors supported the increase in activity, including stable economic conditions, price reductions and growing customer confidence. Four of the five broad sectors covered by the survey saw output increase, the exception being services,” the report carried.
October readings are the highest the red metal has recorded in 44 months and will the third expansion in the year 2021 following years of contraction as the pandemic era hit. With increased risk appetite in the economy following the presentation of the national budget that highlighted various policy changes especially taxation to the mines and other incentives to the private sector, Zambias purchasing managers index is expected to trend bullish in the coming months.
The Kwacha Arbitrageur