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Out put, new orders down amid cash squeeze —Stanbic PMI report


Zambian firms have continued to face challenging business conditions at start of the second quarter, with money shortages being the key factor behind falls in output and new orders.

This is according to the latest Stanbic Purchasing Managers’ Index (PMI) obtained by Zambia Monitor in Lusaka on Monday.

Read more: Zambia’s private sector returns to growth, first time in 4 months —Stanbic PMI

It stated that money shortages in the economy and related cash flow as well as financial issues caused further reduction in both output and new orders in April.

This saw activity and new business down for the second successive month, but to lesser extent than seen in March as an appreciation of the Kwacha against the United States (US) dollar.

It is reported that this helped lead to some signs of customers returning.

“A recent improvement in the strength of the kwacha helped to relieve some pressure on prices and resulted in a softening of the downturn,” it indicated.

Musenge Komeki, Head of Trading at Stanbic Bank commented: “The headline PMI posted a second consecutive reading below 50.0 however the pace of decline in business conditions softened compared to the previous month mainly due to the strengthening of the kwacha.”

It however, stated that the new orders decreased in the construction and wholesale & retail sectors, were unchanged in manufacturing and rose in agriculture and services.

The report further indicated that the recent improvement in the strength of the currency also acted to limit rates of inflation in the private sector in April, although the sustained depreciation of the kwacha over the course of the first quarter of the year meant that some residual price pressures remained.

It stated that the headline PMI posted below the 50.0 no-change mark for the second month running in April, signalling a further deterioration in business conditions in the Zambian private sector.

The index rose to 48.7 from 46.9 in March, however, to indicate that the pace of decline softened in the latest survey period.

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