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The Sales Managers' Index: Africa

Released: February, 19 2015

Africa SMI reflects strong but slower economic activity in February

  • Egypt leads Pan-Africa economic expansion
  • Manufacturing and Service sectors slow to 15 month low
  • Prices Charged Index continues to rise at a modest pace

The Headline Index (calculated from an average of the Business Confidence, Market Growth, Sales, Prices and Staffing Indexes) signalled strong but slower economic activity in February. The Index came in at 57.4, down from 58.2 in January. The World Economics Sales Managers’ Index (SMI) for Africa is by far the most up-to-date monthly assessment of business conditions in the Pan-African economy. A reading above 50 indicates an expansion, while a reading below 50 indicates a contraction.

Among the major economies covered, Egypt registered the highest reading in February (65.5), followed by Nigeria (60.8), Algeria (58.7) and South Africa (58.6). Egypt has been growing at a constantly solid pace since the coup d’etat in 2013. In contract, Africa’s largest economy, Nigeria, has seen a slowing in overall level of economic growth during the same period. The Nigerian economy has steadily been eroded by the security situation in the north of the country, slowing growth and since the end of last year by a falling oil price. Neither of these political and economic pressures improved in February.

The overall Pan-Africa Sector analysis shows that the February Manufacturing SMI fell to 58.0, down from 58.5 in January, and the Services SMI fell to 58.4, down from 59.8. These index values indicate, nonetheless, that business conditions across the African continent is expanding at a robust pace.

The Business Confidence Index, which measures how Sales Managers’ expect the economy to perform over the coming months registered 69.9 in February, down from 70.2 in January. This indicates the second month of consecutive declines but shows that the majority of panellists across Africa remain very optimistic about future business conditions. Meanwhile, the Market Growth Index stood at 58.2 in February, down from 59.2 in January. This signals the third consecutive monthly decline and the slowest pace since September 2014. However, the latest reading continues to point to strong levels of market expansion.

The Product Sales Index fell sharply to 54.2 in February, down from 57.0 in January, indicating that sales are increasing at a modest pace. The slowdown in the level of monthly sales reflects the decline in both business confidence and market growth and a slight increase in prices. Although the Prices Charged Index improved marginally in February, the latest reading of 52.9 suggests that Sales Managers across Africa continue to rise prices at a modest pace.

The Staffing Levels Index, which reflects the number of staff taken on compared to the same period last year, fell to 51.9 in February, down from 52.5 in January, reflecting a slightly weaker pace in job creation across the continent.

World Economics Chief Executive Ed Jones commented on the release:

“February’s Africa SMI data indicated a strong but a slower rate of overall economic activity across the region. Egypt has continued to expand at a strong pace where the larger economy of Nigeria is continuing to slow ahead of the delayed presidential election. South Africa is seeing consistently solid growth.”


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Notes to Editors
The SMI’s (Sales Managers’ Indexes) are compiled and analysed by World Economics and are based on survey data collected from a panel of over 450 African companies stratifying all Industry Classification Board (ICB) sectors which are weighted to reflect their contribution to national Gross Domestic Product.

The Sales Managers’ Index results are calculated as diffusion indexes which have the characteristics of leading indicators by taking the percentage of respondents that report that activity has risen (“Increasing") and adding it to one-half of the percentage that report the activity has not changed (“Unchanged"). Using half of the “Unchanged" percentage effectively measures the bias toward a positive (above 50 points) or negative (below 50 points) index. An example of how to calculate a diffusion index: if the response is 40% “Increasing," 40% “Unchanged," and 20% “Reducing," the Diffusion Index would be 60 points (40% + [0.50 x 40%]). A value of 50 indicates "no change" from the previous month.

The more distant the index is from the amount that would indicate "no change" (50 points), the greater the rate of change indicated. Therefore, an index value of 58 indicates a faster rate of increase than an index value of 53, and an index value of 40 indicates a faster rate of decrease than an index value of 45. A value of 100 indicates all respondents are reporting increased activity while 0 indicates that all respondents report decreased activity.

Three month Moving Averages are applied to each index to mitigate the effect of seasonal variations, original unadjusted data are not revised after publication.

About the Sales Managers’ Indexes
The Sales Managers’ Indexes are a series of new products available for Africa, Asia and the Americas, designed to raise the voice and profile of sales people throughout the world. The Sales Managers’ Indexes provide the earliest indication each and every month of the direction of economic activity, and the speed at which its markets are growing.

Sales Managers are unique as an occupational group in being really at the front line of economic activity. The Sales Manager is ideally placed to feel the first few whispers of caution in the market or to see the new green shoots of economic recovery.

The Sales Managers’ Index brings together the collective wisdom of Sales Managers and consequently produces the best and earliest source of understanding about what’s really happening in the African economy.

The Sales Managers’ Index has been developed by World Economics, a leading edge provider of original economic data. Sister products include the World Economics Journal, the World Price Index, the Global Marketing Index, as well as the China, India and Eurozone Growth Monitors

About World Economics
World Economics is an organisation dedicated to producing analysis, insight and data relating to questions of importance in understanding the world economy. Its parent company Information Sciences Ltd has a long history of the development of key business information today used throughout the world, including the origination of the Purchasing Managers Indexes in Europe and Asia (now owned by Markit), and the development of WARC a global information provider for major corporations .

Currently our primary research objective is to encourage and assist the development of better and faster measures of economic activity. In cases where we believe we can contribute directly, as opposed to through highlighting the work of others, we are producing our own measures of economic activity.

Our work is mainly of interest to investors, organisations and individuals in the financial sector and to significant corporations with global operations, as well as governments and academic economists.

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944 days ago
Now I feel stpiud. That's cleared it up for me

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