Companies in Zambia experienced a further deterioration in business conditions in December, according to a Purchasing Managers’ Index (PMI) Survey availed by Stanbic Bank.
But data equally shows that the private sector witnessed a steady increase in employment despite experiencing slow business growth.
According to the latest Stanbic Bank Zambia PMI report released last Friday, companies in the country experienced a further deterioration in business conditions last month, ending a challenging second part of 2018.
“Companies in Zambia experienced a further deterioration in business conditions in December, ending a challenging
second half of 2018. The rate of decline in new business continued to soften amid some signs of improving client numbers, but output fell at a faster pace,” the report read.
The report stated that data from the PMI illustrated that businesses in the country continued to experience poor conditions month-on-month last year.
“The headline figure derived from the survey is the Purchasing Managers’ Index (PMI). Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration. At 47.8 in December, the headline PMI dipped from 48.1 in November and signaled a solid monthly deterioration in business conditions in the Zambian private sector. Operating conditions have now decreased in five successive months,” the Survey revealed.
“Output fell at a sharp and accelerated pace in December, with slow business and a lack of money in the economy highlighted again by panelists. The acceleration in the rate of decline in activity was recorded in spite of a slower reduction in new business. Although new orders continued to fall at a solid pace, there were some reports that customer numbers had started to improve. Meanwhile, backlogs of work declined again at the end of 2018.”
But the data equally shows that the private sector witnessed a steady increase in employment despite experiencing slow business growth, buoyed by the Festive Season.
“In spite of a sustained reduction in workloads, Zambian companies hired additional staff in December, the seventh month running in which this has been the case. Respondents indicated that they had increased staffing levels to work on new projects. That said, there were some reports of difficulties in paying staff. The recent increase in the minimum wage in Zambia meant that staff costs rose for the third month running, and at a relatively solid pace. Signs of improvement in customer demand led firms to increase their purchasing activity for the first time in three months. The slight rise in input buying was insufficient to result in a rise in inventories, however, which were broadly unchanged,” read the report.
Commenting on the Survey’s December findings, Stanbic Bank Zambia’s Head of Global Markets Victor Chileshe stated that companies took advantage of the festive period to hire more staff.
“While we saw input costs rising, companies tried to take advantage of the Festive Season as seen by the softening in the rate of decline in new business and the continued taking on of extra staff,” stated Chileshe.
The Stanbic Bank Zambia PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in approximately 400 private sector companies, which have been carefully selected to accurately represent the true structure of the Zambian economy, including agriculture and construction, among others.