September private sector growth deteriorates- PMI...
Business activity for September as measured by purchasing managers index – PMI is still in the woods. Zambia printed a (PMI) headline reading of 48.6, a deterioration from 49.0 on account of inflationary effects of currency volatility that caused higher wage and raw material costs. (Readings above 50 signal increased private sector activity while those below 50 signal as low down in business pulse).
September PMI readings was 48.6 from 49.0, a 7-month low on account of higher raw material costs and wage bills
Business activity for September as measured by purchasing managers index – PMI is still in the woods. Zambia printed a (PMI) headline reading of 48.6, a deterioration from 49.0 on account of inflationary effects of currency volatility that caused higher wage and raw material costs. (Readings above 50 signal increased private sector activity while those below 50 signal as low down in business pulse).
“Weaker customer demand, higher wage bills and increasing costs of raw materials is the narrative for the worsening business conditions seen in September. With the rising costs of input, it is reasonable to expect that customers will soon be paying more for goods and services,” Stanbic Zambia Head Global Markets – Victor Chileshe commented.
The Business Times in its publication dated 24 September, forecast a further slowdown in private sector activity following a weakening kwacha on account of dollar scarcity. The Business Times predicated headline PMI of between 48.4 -48.7 from previous levels of 49.0. The kwacha has shaved over 22% in value YTD on account of dollar fetish and strong dollar environment globally in the spate of trade war threats between United States and China. Medium term inflation is expected to tick higher as currency effects price in.
At 48.6 in September, down from 49.0 in August, the headline PMI dropped to a seven-month low and signalled a further deterioration in business conditions. Output, new orders and suppliers’ delivery times all contributed negatively to the headline figure, partly offset by positive impacts from employment and stocks of purchases, Markit carried on its website on 02 October.
September data pointed to challenging business conditions in Zambia’s private sector economy, with the latest reading from Stanbic Bank and IHS Markit pointing to a further deterioration in overall business conditions. Business activity and new business both declined for the second month running, and at faster rates. The latest survey results also signalled weakening price pressures. Although total input costs continued to rise, average purchase prices fell slightly and wage costs were broadly flat.