Private sector edges towards recovery, Stanbic Purchasing Managers’ Index shows

Zambia’s private sector moved closer to stabilisation in June as business conditions showed signs of improvement, although weak demand continued to constrain new orders and output, the latest Stanbic Bank Zambia Purchasing Managers’ Index (PMI) shows.

The PMI rose to 49.9 in June from 49.3 in May, its highest reading in recent months and just below the 50-point threshold that separates contraction from growth.

The survey found that subdued customer demand and reduced money circulation continued to weigh on business activity, resulting in a second consecutive monthly decline in new orders.

However, the pace of contraction eased, while overall output was broadly unchanged.

Manufacturing firms recorded declines in production and new orders, while wholesale and retail businesses also experienced lower output during the month.

Despite the subdued operating environment, businesses remained optimistic about the year ahead, with expectations of stronger customer demand and new business opportunities supporting confidence.

The improved outlook encouraged firms to increase employment, purchase more inputs and build inventories in preparation for anticipated growth.

The survey also showed that input costs continued to rise due to higher fuel, energy, wage and exchange rate-related expenses.

However, competitive market conditions prompted many businesses to cut selling prices for the first time in three months as they sought to attract customers.

Commenting on the survey, Stanbic Bank Zambia Head of Sales, Musenge Komeki, said the June results suggested the private sector was gradually regaining stability despite continued demand pressures.

“Weak demand continued to weigh on new orders and output, but firms responded by increasing hiring, purchasing more inputs and building inventories in anticipation of future growth,” Komeki said.

He added that while higher fuel, energy, labour and exchange rate costs continued to drive up input prices, businesses reduced selling prices to remain competitive.

Komeki said business confidence remained positive, supported by planned investments, marketing initiatives and expectations of stronger customer demand over the next 12 months.

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