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Decline in money supplies in November have led to a further deterioration in business activities in Zambia’s private sector, with output and new orders both down for the second month running.
This is according to the latest Stanbic Bank Zambia Purchasing Managers Index (PMI) posted on December 11, 2022.
The headline PMI posted 49.1 in November, broadly in line with October’s reading of 49.0.
This signalled a modest deterioration in operating condition of the Zambian private sector for two consecutive months.
PMI survey indicated that firms reduced their purchasing activity and with employment falling for the first time in eight months.
It stated that there remained a lack of inflationary pressure, however, with both input costs and output prices ticking down midway through the final quarter of the year.
Anecdotal evidence highlighted the negative impact of money shortages in the economy, with customers often unable to commit to new projects.
Victor Chileshe, Head of Global Markets at Stanbic Bank commented: “Business activity has been impacted by money shortages in the economy and hopefully should pick up as the festive period approaches.”
As a result, the PMI survey stated that new orders decreased for the second consecutive month, albeit at a marginal pace that was slower than seen in October.
Feeding on from the drop in new business, output also decreased for the second month running, and at a solid pace.
Falls in activity were recorded across each of the five broad sectors covered by the survey.
Meanwhile, backlogs of work were unchanged following a fall in October.
The PMI survey stated that in line with the picture for new orders, companies reduced their employment and purchasing activity in November.
“The slight fall in staffing levels ended a seven-month sequence of job creation, while the reduction in input buying was the second in as many months,” it stated.
Stocks of purchases also decreased for the second successive months.
Despite lower demand for inputs, the survey indicated that suppliers’ delivery times lengthened, extending the current sequence of deterioration to five months.
Overall input costs decreased marginally midway through the final quarter of the year, after having risen in October.
Input prices fell in the agriculture, manufacturing and construction sectors, but rose in wholesale and retail and services.
Purchase prices were unchanged in November, while staff costs continued to increase as firms made efforts to help workers with higher living costs.
According to the PMI survey, wages have risen continuously since April.
Output prices decreased for the third month running as companies offered discounts to try and attract customers. That said, the pace of reduction was only marginal.
Readings above 50.0 signals improvement in business conditions on the previous month, while reading below 50.0 show deterioration.
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