Zimbabwe manufacturing sector free-fall continues

via Zimbabwe manufacturing sector free-fall continues October 9, 2014

THE Confederation for Zimbabwe Industries (CZI) has said the Purchasing Managers Index (PMI) stood at 43,5% this year, signalling that there was no respite to the economic decline, according to statistics released yesterday.

The PMI is a diffusion index that looks at new orders, inventory levels, production, supplier deliveries and employment conditions.

Each of the five factors are adjusted and weighed according to the time of the year and other factors.

Speaking at a breakfast meeting held in the capital yesterday, CZI senior economist Daphne Mazambani said the business lobby and advocacy body had introduced the PMI to provide useful, timely and update information for stakeholders and policymakers.

This is the first time that the country has produced statistics for PMI.

“The manufacturing sector recorded a PMI of 43,5% during the period under review, which is a further indication of a decline. This statistic will be produced monthly by CZI. Discussions are at advanced stages to collaborate with the Zimbabwe National Statistics Agency,” Mazambani said.

According to the results, current production did not change. It stood at 50%, while all the other indicators showed a decline, but inventories declining more than the other variables.

PMI above 50% means the manufacturing sector is growing and expanding. A PMI under 50% means the manufacturing sector is contracting.

The capacity utilisation in the manufacturing sector shed 3,3 percentage points to 36,3%.

The country’s capacity utilisation level has been on a decline path since 2011 and is continuing on that trend as the unavailability of working capital hampers the manufacturing sector.

Mazambani said 47% of respondents for the survey indicated that the economy will be in recession in the next 12 months, while 30% expected slight growth.
Nineteen percent and 4% of respondents expected moderate growth and strong growth respectively.

“There are 38% respondents who indicated that the economy will experience slight growth compared to 30% in 2013. It was the view of the majority of respondents that the current economic environment was not conducive for business. The tight liquidity situation has further exacerbated the situation for most companies affecting cash flow positions thus affecting operations,” she said.

CZI president Charles Msipa said the industrial base was under serious threat and industrial competitiveness remains a major concern.

He said this is shown by the revision of the Gross Domestic Product projections downwards by Finance minister Patrick Chinamasa to 3,1% from 6,1% he had earlier projected.

Msipa applauded the engagements that have been done between industry and government which has helped the manufacturing sector.

“More can and should be done to revive the manufacturing sector. I would like to thank PTA and Afreximbank for the support to the manufacturing sector. Without what they extended the situation would have been dire today,” he said.