Business Reporter
Zimbabwe's manufacturing and mining sectors demonstrated resilience amid persistent economic challenges during the third quarter of 2024, as revealed by the Volume of Manufacturing Index (VMI) compiled by the Zimbabwe National Statistics Agency (ZimStat).
While some sub-sectors achieved notable growth, overall capacity utilisation and confidence indices reflected a less optimistic outlook.
Capacity utilisation in the manufacturing sector declined to 47.1% in Q3 2024, down from 48.4% in the previous quarter.
Large manufacturing companies recorded a drop from 60.8% to 57.5%, while small and medium enterprises saw their utilisation rate fall to 45.4%.
These declines highlight ongoing challenges such as severe power shortages and limited access to funding, which constrained efforts to ramp up production.
The Purchasing Managers Index (PMI) for the sector, a critical measure of manufacturing health, dipped slightly from 35.8 in Q2 to 35.0 in Q3.
This value, well below the threshold of 50, indicates continued contraction in the sector.
The Manufacturing Confidence Index also reflected diminished optimism, retreating from 3.1 to 2.1 over the same period.
Despite these challenges, certain manufacturing sub-sectors experienced robust growth.
The overall VMI rose to 156.21, marking a 14.57% year-on-year increase compared to Q3 2023. Notably, the clothing and footwear sub-sector grew by an impressive 64.43%, while metals and metal products expanded by 30.53%.
However, textiles and ginning and paper and printing suffered steep declines of 22.41% and 85.68%, respectively, highlighting an uneven recovery across industries.
The mining sector also faced hurdles, with capacity utilisation dropping to 52.7% from 57.5% in the previous quarter.
The Mining Confidence Index reflected declining sentiment, falling from 12.9 in Q2 to 7.3 in Q3. While 70% of respondents in the sector described their order books as normal, only 5% reported above-normal stocks of finished goods, underscoring a cautious approach to inventory buildup.
Stocks of raw materials remained modest, with just 4.9% of mining respondents reporting above-normal levels.
These figures suggest that constrained production planning continues to weigh on the sector’s growth potential.
Both sectors identified three primary challenges: electricity shortages, cash flow difficulties, and an uncertain economic outlook.
These issues have not only hampered production, but also eroded business confidence, emphasising the need for systemic interventions.
Despite these obstacles, the data highlighted pockets of resilience. The year-on-year growth in specific manufacturing sub-sectors underscores their potential to drive economic recovery if critical constraints are addressed.
ZimStat’s report concluded with cautious optimism: “The data reflects the resilience of certain industries but underscores the urgent need to address structural challenges. Only through targeted interventions can these sectors realise their full potential and contribute meaningfully to the nation’s economic recovery.”
As the country anticipates the fourth quarter results, stakeholders are focused on addressing systemic challenges to sustain growth.
