The recent sequence of growth in the Zambian private sector came to an end in August, with output and new orders both down amid financial pressures caused in part by currency weaknesses.
This is according to the latest Stanbic Bank Purchasing Managers’ Index (PMI) obtained by Zambia Monitor in Lusaka on Wednesday.
According to the survey, output decreased for the first time in four months amid reports of challenging business conditions, which often reflected money shortages in the economy.
The survey stated that the activity fell in the manufacturing, construction and wholesale and retail categories, but rose in agriculture and services.
Similarly, new orders also returned to construction territory, thereby ending a three-month sequence of expansion.
The survey cited money shortages were sometimes linked to currency weakness, which was the main factor behind a renewed increase in purchase costs.
This saw purchase prices rise solidly and to the greatest extent since April, 2023.
Some panellists indicated that higher fuel prices had added to cost pressures.
The survey further stated that staff costs were also up, reflecting bonus payments and efforts to help workers with higher living costs.
The report notes that the rate of inflation softened to the weakest in the current four-month period of increasing staff costs.
“The pace of output price inflation also eased and was marginal. Some firms raised selling prices in response to higher cost burdens, but others offered discounts to customers to try and attract new orders,” the survey added.
Musenge Komeki, Head of Trading at Stanbic Bank commented: “Output and new orders were down in August amid financial pressures caused by currency weakness, consequently reversing the sequence of growth experienced by Zambia’s private sector in recent months.
“However, companies continued to take on extra staff in order to reduce backlogs of work and help ensure projects were completed on time.”
The headline PMI dipped below the 50.0 no-change mark during August, posting 49.2 from 51.0 in July.
Komeki said the PMI reading signalled a slight deterioration in business conditions.
This was observed midway through the third quarter, thereby ending a three-month sequence of improvement.
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