eBusiness Weekly
Business Writer
The country’s private sector Purchasing Managers’ Index (PMI) returned into positive territory in the fourth quarter of 2021 according to the Zimbabwe Statistical Agency (ZIMSTAT).
ZIMSTAT said the composite PMI for the fourth quarter increased by 10 points as it moved up to 50.7 from a low of 40.7 in the third quarter.
The PMI for the country’s private-sector services hit its highest in four years, as output in the manufacturing sector was reported to have slightly increased in the year 2021.
Index value signifies slight expansion in the manufacturing sector when compared to the third quarter.
The PMI is an index of the prevailing direction of economic trends in the manufacturing and service sectors. It consists of a diffusion index that summarises whether market conditions, as viewed by purchasing managers, are expanding, staying the same, or contracting.
A PMI above 50 represents an expansion when compared with the previous month.
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 indicator was -0.3 percentage points implying 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 the Covid-19 pandemic.
Due to foreign currency shortages and auction market backlogs which sometimes run in excess of 9-12 weeks led to 48 percent of the respondents saying cash flow difficulties dampened production from the third quarter in 2021 and will likely continue in the first quarter of 2022.
Policy inconsistency has been talked about by private companies and 48 percent of those who took part in the ZIMSTAT survey agreed that uncertainty towards the economic environment has been an obstacle to manufacturing confidence.
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.
Farai Mutambanengwe during the presentation noted that 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 who are accessing foreign currency at 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”, Mutambanengwe said.
