August PMI readings expected between 4 9.8-50.1…

Private sector pulse for August as measured by purchasing managers index (PMI) is expected to weaken, the Zambia Business Times carried in a note to its premium subscribers. With the challenges that the economy has experienced in the spring month of August ranging from kwacha volatility effects from the strong dollar contagion, which Zambia has not spared, business activity has been impacted to some extent.

July PMI readings according to Markit economics where 50.3 (a three month low) weighed by price inflation effects. (Readings above 50 signal increased private sector activity while those below 50 signal as low down in business pulse)

The Zambia Business Times said August volatility of the kwacha was higher than July and that copper plummeted to 1- month lows falling below USD5,965/mt amidst a global sell -off of risky assets as players sought refuge in the international reserve currency the dollar.

Zambia recorded an 8.1% inflation breaching the BOZ target range of 6-8% (a 20 – month high). Upside risks to inflation remain fairly high from likely extended dry spells exacerbating food inflation, higher crude prices at USD77.7 bbl. threatening pump prices and rand volatility which could swell Zambia’s import bill.

“We expect PMI readings of below 50.3 but nothing below 49.8, which is worrisome. This should signal the need for manufacturing capabilities to raise the export base to weather the global storms’” Lead Analyst said in a note.