Local industrial activity improves
THE private sector Purchasing Managers’ Index (PMI) gained 10 points in the fourth quarter of 2021 to 50,7 compared to the prior quarter, indicating improved industrial performance, the Zimbabwe National Statistics Agency (ZimStat) said.
The PMI for the country’s private-sector economic activities hit its highest level in four years, as output in the manufacturing sector increased in 2021.
Index value changes demonstrate production dynamics in the manufacturing sector when compared to the previous period. The PMI is an index that measures the direction of economic trends in the manufacturing and service sectors.
It consists of a diffusion scale that summarises market conditions, as viewed by purchasing managers, indicating expansion, constant state, or contraction.
A PMI above 50 represents an expansion when compared with the previous period, monthly or quarterly. A PMI reading under 50 represents a contraction, and a reading at 50 indicates no change. The further away from 50 the greater the level of change.
In the fourth quarter of 2021 the manufacturing confidence indicators shows that manufacturers expected business performance in first quarter 2022 to be almost the same as was in fourth quarter 2021.
Manufacturers cited three major constraints being faced by industry with 52 percent of respondents citing shortage of raw materials as the major constraint.
This comes as the world has been gripped by the rising costs of shipments and heavy backlogs of deliveries due to disruptions caused by the Covid-19 pandemic.
Due to foreign currency shortages and auction market backlogs which may sometimes run for weeks, 48 percent of the respondents said forex challenges dampened production for the third quarter in 2021 and were likely to persist in the first quarter of 2022.
The central bank however this week released US$100 million to clear the backlog on the auction market and has pledged to work towards being current on all future allotments.
Economist Tinevimbo Shava, said the further reopening of the economy after Covid-19 restrictions will definitely help to offset the drag from the conflict in Ukraine and rising prices.
“However, the outlook seems dark as concerns over the Russia-Ukraine war are exacerbating existing worries over soaring prices, supply chains and possible economic growth,” he said.
Average prices charged rose in March, driven by the services sector as businesses sought to pass on unprecedented rises in their operating expenses.
During the presentation of the survey results, Farai Mutambanengwe said there was a need for the statistical agency to do a review of the small and medium enterprises (SME) sector and classify them according to those that are accessing foreign currency from the auction market and those that are not.
“We need to see the difference in how the auction market is also affecting production especially in the SME sector, so if in the future you can separate those accessing foreign currency from those that are not it would really be useful”, Mr Mutambanengwe said.-The Herald
