EMPLOYMENT IN ZAMBIA’S PRIVATE SECTOR RETURNS TO GROWTH
Stanbic Bank, IHS Markit PMI survey reports sustained expansion in local business activity
LUSAKA, ZAMBIA – Business conditions in the private sector maintained an upward trend at the close of the second quarter of 2018 according to the latest Stanbic Purchasing Managers’ Index (PMI). The June PMI posted a headline reading of 51.9, down from 52.3 the previous month. Despite easing slightly from the previous survey period, the PMI signalled a further solid improvement in the health of the Zambian private sector. [Headline readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.
Business activity continued to expand amid rising volumes of new business and customers as well as stronger demand compared to May. Consequently, companies increased their staffing levels in June for the first time since February this year while purchasing activity and inventories also sustained their growth. Meanwhile selling prices maintained an upward trajectory in the private sector reflecting higher cost burdens and elevated fuel prices. Coupled with rising staff costs, this contributed to input cost inflation in June.
Stanbic Bank Head of Global Markets, Victor Chileshe said: “The June PMI continues to be buoyed by new business which we see as positive, despite input price inflation. Again, increased numbers of customers and improved demand were key factors influencing the expansion in new order volumes, according to panellists. Accordingly, businesses increased their workforce numbers for the first time since February amid efforts to expand operating capacity. Firms also reported greater buying levels and stocks of purchases. Outstanding business meanwhile accumulated for the first time in 2018.”
Anecdotal evidence suggested that greater volumes of new business were behind the increase in work-in-hand. On the price front, overall input costs continued to expand in June. Contributors to the overall rise were higher purchase prices and staff costs, with purchase cost inflation at a five-month high. Output prices rose accordingly, with firms noting that higher cost burdens and fuel prices were key factors influencing their decision to increase average selling prices. Elsewhere, delivery times shortened, with businesses reporting that competition among suppliers was partly responsible.