Zambia’s economy not good for business so far
There is no money in circulation, and this has led to a continuous decline in business activity even in January 2019, says Stanbic Bank Zambia limited.
According to Stanbic Bank Zambia’s current Purchasing Managers’ Index (PMI) Survey, business activity remains subdued due to low consumer sales and little money in circulation.
“A weaker fall in new orders was registered in January, with the rate of contraction easing for the third consecutive month to the lowest since last September. Some panellists reported a continued lack of customers, although others indicated that they had been able to secure new clients. Slow sales and a lack of money in circulation were reportedly behind the latest reduction in business activity – the sixth in as many months. Output fell at a solid pace, albeit one that was weaker than in December, in line with a softer decline in new orders,” the report revealed.
“Companies in Zambia continued to reduce their outstanding business in January amid a further reduction in new orders. Backlogs of work have fallen in each month since July last year. Sustained reductions in workloads brought an end to a six month period of job creation in January as employment decreased fractionally during the month.”
It also noted slow business activity in purchasing activities.
“Purchasing activity decreased for the third time in the past four months, with inventories also falling as companies displayed a reluctance to hold stocks amid reducing new orders. The length of time taken for vendors to deliver items shortened again, with reports suggesting that regular suppliers remained reliable,” it stated.
“Overall input costs increased sharply again at the start of the year amid a marked rise in purchase prices and modest staff cost inflation. Where purchase prices increased, panellists mentioned higher fuel costs as well as the weakness of the kwacha against the US dollar.”
Although data shows a slight improvement in business conditions between December and January, the Survey findings, as illustrated through the PMI, revealed a sustained deterioration in business conditions during the first month of the New Year.
“The headline figure derived from the Survey is the PMI. Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show deterioration. At 48.1, the PMI continued to signal deteriorating economic conditions during January extending the current sequence of decline to six months. That said, the reading was up from 47.8 in December to indicate a slightly softer contraction,” data revealed.
Source: Zambia Watchdog