Nigeria’s business pulse at 3yr record, Zambia slides to 4month low as South Africa’s deteriorates...

Zambia’s Private Sector Growth slides to 4month Low

Zambia’s private sector growth for December eased slightly, sliding to a 4month low according to data compiled by IHS Markit from 5-15th of last month. The Southern African nation recorded a Purchasing Managers Index – PMI of 52.9 points, 1.8 points lower than November the highest it has ever recorded.

Business conditions improved but at a slower pace according to the IHS Market website commentary. Zambia’s employment expanded at the fastest rate in the last three months which is a function of improved recovery at a time when the price of copper has been on the uptick propelling the mines to produce more thereby taking up higher labour force numbers. The survey revealed an improvement in the health of the Zambian private sector in December, although at a slower pace than observed in November. Business activity generally increased, bolstered by further growth in new business.

Companies reacted by expanding their workforce, increasing their purchasing activity and inventories. Despite expanding capacity, firms continued to accumulate outstanding business. On the price front, overall cost burdens continued to rise as staff costs increased.

Despite growth easing slightly to a four-month low, the PMI remained above the survey average and signalled a further solid improvement in business conditions in the Zambian private sector.

“Despite the slower pace of improvement in the health of the private sector, December saw the fastest growth in employment in 3 months. Businesses continue to cut prices to attract more customers. The cuts are despite a slight increase in input costs. We have also seen December become slower from a US$ demand perspective. This is usually a trend in December as businesses begin to wind down activity towards year end.” Victor Chileshe, Head of Global Markets -Stanbic Bank Zambia

Ghana’s Business conditions improve

The Ghanaian private sector ended 2017 firmly inside growth territory. Ghana recorded a headline PMI of 53.5 in December, down from 54.8 in November but still signalling a solid monthly improvement in business conditions at the end of the year. Operating conditions have now strengthened in each of the past 23 months. Although new orders continued to rise in December, the rate of expansion slowed sharply from the previous month to the weakest since September 2016. Where new business increased, panellists linked this to good quality products and successful marketing strategies. The rate of expansion in output also eased, but remained solid amid growth of new orders. Business activity has now increased for 15 months in a row. Commenting on December’s survey findings,

“After staging something of a comeback in November 2017, the Headline PMI moderated once more to 53.5 in December 2017 from 54.8 as surveyed businesses reported slightly lower but still strong output growth. The output PMI moderated to 53.8 in December from 54.6 in the prior month. This relatively strong PMI reading suggests that while the economy is unlikely to record the same level of growth that it did in the third quarter (9.3% y/y), it should remain robust. Heading into 2018, we expect Ghana’s economy to continue posting strong growth, albeit slightly weaker than in 2017 as the strong base effects wear off. In December 2017, headline inflation will probably rise slightly higher than the 11.6% y/y posted in November, especially as the output price PMI also rose to 55.0 from 54.6 in November.” Ayomide Mejabi, Economist at Stanbic Bank

Nigeria’s private sector growth hits three-year high

Africa’s most populous nation Nigeria’s private sector activity hit a 3yr high in December when the oil producing economy recorded a 56.8 PMI number from 55.2 in November representing record high growth in new business. This is the highest since the survey started in the West African giant 3yrs ago. The PMI levels were above 50.0 in every month of 2017, and has risen 13 times in the past 16 months since hitting a low of 46.3 in August 2016. Private sector firms reported rising new export orders for the fourth month running during December. That said, the rate of increase softened since the record high expansion signalled in November. Ayomide Mejabi, Economist at Stanbic Bank said

“As expected, the Nigerian economy probably expanded at a decent pace in December due to activity related to the festive season. That being said, challenges with petrol supply which emerged in the later part of December likely disrupted business activity and general consumer sentiment, and may have tempered potentially stronger growth in the economy.

At 56.8, the headline PMI hit a three-year high, continuing a steady sequence of growth in 2017. Certainly, the rebound in FX availability partly due to improvements in the oil sector helped buoy economic growth in 2017. Looking ahead into 2018, we expect that the Nigerian economy should continue its rebound, perhaps reaching around 2.5% driven mainly by further improvements in the oil sector and some structural adjustments, some of which were evident in 2017. Further analysis of the PMI shows that output and input prices continued to rise, albeit at a less aggressive pace. This suggests that headline inflation will probably print around 15.9% in December 2017.” Ayomide Mejabi, Economist at Stanbic IBTC Bank

South Africa’s Business Pulse deteriorates

Business pulse declined at its fastest pace in the South African economy. Africa’s most industrialised economy recorded a PMI of 48.4 in December the fifth decline in a row. A reduction in business activity formed the basis for the deterioration as output fell at a strong and accelerated pace. New business also decreased, but at a slightly softer rate than observed in November. Amid a lack of demand, firms continued to contract their workforce numbers, purchasing activity and inventories.

“The private sector PMI remained in contractionary terrain, dropping to 48.4 in December from 48.8 in November, marking the fifth consecutive month of deteriorating domestic business conditions and was the fastest pace of decline observed in 20 months. The decline in the PMI is likely to persist in the near term amid deteriorating fiscal outlook and elevated risk of further sovereign ratings downgrades. However, further declines in the private sector PMI could potentially be averted should the governing party work tirelessly to restore lost business confidence. In 2017 the economy-wide PMI averaged 49.8, slightly higher than the 49.7 average for 2016 but lower than the 50.6 historical average. This reflects continued lack of economic optimism and generally weak domestic economic activity. The decline in the private sector PMI in December was broad-based and was largely driven by continued declines in output (supply) which registered the fasted pace of decline observed in 21 months. This was followed by further decline in new orders (demand), stocks of purchases (inventories) and employment.” Thanda Sithole Economist at Standard Bank

Ugandan Business activity continued to strengthen

The East African coffee producer’s business activity continued to strengthen in December as it recorded a PMI of 54.3 a few points below the November 54.9 PMI number. The output, new orders, employment and stocks of purchases components all contributed to the above 50.0 figure. Improvements in operating conditions were broad-based, as the five monitored sub-sectors (agriculture, services, wholesale & retail, construction and industry) each registered stronger business conditions. Growth in the volume of new orders received at Ugandan private sector companies continued in December.

“The PMI has averaged 54.0 in the fourth quarter of 2017 up from an average of 52.4 in the nine months to September, as economic activity gradually improves. While there have been signs of a pick-up in private sector lending by commercial banks, the high NPL ratio within the banking sector will probably keep the recovery moderate. That being said, an increase in public investment expenditure keeps up optimistic that GDP growth will remain on upward trajectory over the coming year Jibran Qureishi, Regional Economist E.A at Stanbic Bank said

Egypt’s business activity eased slightly

Emirates NBD Egypt PMI™ falls in December, but posts highest quarterly average in over two years Cairo, January 4th, 2018: The Egyptian non-oil private sector ended 2017 with a deterioration in business conditions, though the decline over the fourth quarter as a whole was the weakest in over two years. Signs of economic stability and increased capital investment plans underpinned strong business confidence during December. In terms of inflation, rates of increase in input and output prices eased and registered comfortably below their respective long-run averages. Declines in output,

“Egypt’s PMI reading dipped back below the neutral 50.0 mark once again in December, dashing hopes that the positive November reading signalled a lasting return to expansion in the Egyptian non-oil private sector. Nevertheless, the pace of contraction was gentler than seen over most of the past several years, future sentiment remains high, and job shedding slowed to a 28-month low, boding well for 2018.”

Daniel Richards, MENA Economist at Emirates NBD