The Stanbic IBTC Bank Purchasing Managers Index (PMI) for December 2023 stood at 52.7, indicating a significant rise from 48.0 recorded in November 2023.
The PMI, which scales between 0 to 100, is an economic indicator that measures the performance of the agriculture, mining, manufacturing, construction, wholesale, retail, and services sectors of the economy by summarizing changes in the working conditions of the private companies in these sectors.
When below 50, the index indicates contraction of the private sector, whereas an index greater than 50 depicts expansion. The PMI of 52.7 signals output expansion and is the first expansion in the past three months.
This notable improvement was fueled by increased output and new orders, which were reinforced by recovering customer demand.
Correspondingly, job creation, backlogs of work, and vendor performance increased. However, activities in the wholesale and retail sectors faced a decline in investors’ confidence. To restore investors’ confidence, it is pertinent that the government creates a favourable investment climate through policy adjustments and transparent communication.
The government must also sustain the output expansion by addressing pro-business infrastructure challenges, such as electricity while supporting businesses to adopt new technologies and practices that can contribute to growth.
cseaafrica.org
