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The Sales Managers' Index: Africa

Released: March, 19 2015

African Economic Growth Remains Strong in March

  • Egypt continues to lead Africa’s economic expansion
  • Manufacturing and Service SMIs still rising at a solid pace
  • Labour market conditions improve slightly, driven mostly by an sharp increase in staffing levels in Egypt

The Headline Sales Managers’ Index for Africa remained well above the no-change threshold of 50.0 in March, registering 57.3, down fractionally from 57.4 in February. This was the smallest fall in three consecutive month of declines and the lowest level since September 2014. That said, the latest reading still indicates a strong increase in overall economic activity over the month.

Among the major African economies, Egypt again posted the highest reading (66.8), followed by Nigeria (60.3), South Africa (57.9) and Algeria (57.3). A significant increase in foreign direct investment and a rise in job numbers were cited by surveyed respondents in Egypt as the main factors driving these high levels of economic activity. Meanwhile, in Nigeria and South Africa the slowdown in business conditions was attributed to falling oil prices and a deepening energy crisis. Nigerian panellists especially signed short term caution ahead of the delayed presidential elections on the 28th March.

Sector data for pan-Africa shows that the March Manufacturing SMI fell to 57.5, from 58.0 in February, and the Services SMI fell to 57.9, from 58.4 on the previous month. These index figures, nevertheless, suggest that business activity across the African region continues to grow solidly.

The Business Confidence Index, which measures how Sales Managers’ expect the economy to perform over the coming months, stood at 70.6, up slightly from 69.9 in February. Confidence levels were still very high in all four largest economies, especially in Nigeria and Egypt.

In contrast, the Market Growth Index came in at 56.7, down from 58.2 in February. This marks the third consecutive month of declines and the lowest level since August 2014. However, the current figure continues to point to robust levels of market growth.

Similarly, the Product Sales Index fell in line with market growth. The Index registered 52.7 in March, down sharply from 54.2 in February, the fourth straight month of declines and the lowest level since July 2014. The on-going deceleration in the rate of monthly sales mirrors that of market growth. Notably, monthly sales growth were reduced in Algeria and in Nigeria, and in South Africa to a lesser degree. Monthly Sales in Egypt, on the other hand, increased at a greater rate.

On the inflation front, the Prices Charged Index accelerated to a six-month high of 54.0 in March, up from 52.9 in February. This marks the second month of successive increases. However, the overall rate of increase was higher compared to the previous month.

The Staffing Levels Index, which reflects the number of staff taken on compared to the same period last year, increased to 52.3, from 51.9 in February, reflecting a slightly stronger pace in job creation across the continent. Nevertheless, the overall rate of job creation was still modest over the month. By country, staffing levels were decreased in Nigeria, South African and Algeria, while in Egypt, employment rose at the quickest pace since April 2013.

World Economics Chief Executive Ed Jones commented on the release:

“The March SMI data continued to signal strong economic activity in the pan-African region. With market growth and product sales rising at softer rates, the SMI dropped further during the month, although only fractionally. The overall decline, however, was offset by higher levels of business confidence, prices charged and employment.”


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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.

© Copyright Economic & Financial Publishing 2015