Hope for Rebound Rises as African PMI Trend Higher in March
Source: NKC African Economics

Hope for Rebound Rises as African PMI Trend Higher in March

Economic recovery in Africa is expected to be fast as purchasing manager index (PMI) across key economies trend higher in March, NKC African Economic spotted the development in a report.

NKC Economics said at an aggregate level, private sector activity expanded in most major African economies in March with five out of the eight purchasing managers’ index (PMI) reporting economies across the continent recoded expansions, while the latter two and Egypt reported readings below the 50 echelon.

Citing IHS Markit PMI release, NKC hinted that South African manufacturing experienced another month of subdued growth in March.

The index measuring private sector activity inched 0.1 percentage points higher to reach 50.3 points.

Egypt’s PMI dropped from 49.3 in February to 48.0, the lowest reading since June last year. The index averaged 48.7 during Q1 2021, somewhat lower than the average of 50.2 recorded in 2020 Q4 and a clear sign that the economy has lost recovery momentum.

It noted that the Nigeria’s PMI ticked higher to 52.9 as business conditions improved to the best level in five months.

Specifically noted is the fact that purchases were bolstered by solid growth in the output and new orders indices, while employment increased marginally.

Nigeria’s unemployment rate for the fourth quarter of 2020 reading settled at 33.3%, driven in part by pandemic-induced economic dislocations.

Read Also: Nigeria’s PMI Indicates Economic Recovery Underway, Albeit Slow

NKC said private sector activity in Ghana continued to expand in March, but the acceleration slowed somewhat from the month before, as the index declined from 52.5 in February to 51.8 in March.

“The expansionary readings can largely be attributed to increased demand, higher new orders, and a slowdown in new domestic Covid-19 cases”, it added.

Meanwhile, Kenya’s private sector activity growth slowed to a nine-month low, with the PMI recorded at 50.6 in March compared to 50.9 in February.

NKC Economic believes that the output and new orders components signaled a slowdown in both activity and demand growth.

Uganda’s PMI increased to 53.2 – its highest level since November 2020. The rise in the index for March was driven by the continued increase in output and new orders.

Egyptian private sector activity contracted in March following a brief spell above the 50-point threshold towards the end of last year.

Although the PMIs for the remaining African economies (in this analysis) expanded in March, the manufacturing sector in Africa’s most industrialised economy, South Africa, seems to be misfiring, NKC Economic stated.

Hope for Rebound Rises as African PMI Trend Higher in March