Manufacturing pulse in Africa’s red metal hotspot Zambia is set to headline stronger in the purchasing managers index markit economics September readings supported by currency bulls and lower petroleum prices. The PMI reading is set to take a positive cue from the energy regulatory board price cut and sentiment driven Kwacha appreciation in the month.
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This will be the third time consecutively that the Southern African nation will be in expansion territory as businesses take reprieve on input prices that have previously borne the brunt of currency depreciation and elevated fuel prices that resulted in higher selling prices.
The months of August had manufacturing activity right at the benchmark of 50 from 50.5 in July supported by a strong wholesale and retail industry while agriculture and construction sectors showed signs of strain. Fifty sets the branch mark for expansion (50<) and contraction (50>).
Other drivers of manufacturing activity will include availability of liquidity in the market and a lower cost of capital in the wake of improving fiscals. General risk appetite seeping back into the economy remains supportive of an economic rebound.
Crude prices have continued to sag as softer demand on recessionary fears grip the global macros spelling positive prospects for oil importers like Zambia. Coupled with currency movements but for tax waiver expiration October factory pulse outlook could be weighed by a potential higher fuel cost.
READ ALSO: With the expiration of tax waivers Africa’s copper hotspot, petroleum prices expected 11% higher
September readings are expected anywhere between 51.5 and 52. Just some minor changes in spelling but mostly correct. Generally stronger industrial output should result in wider margins for listed companies and thus bullish outlook on manufacturing stocks.
The Kwacha Arbitrageur
