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New orders in Zambia fall sharpest in nearly three years

Staff Writer |
Business conditions for companies in Zambia deteriorated sharply in October as falling customer numbers and currency depreciation contributed to decreases in output and new orders.

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On a more positive note, employment was broadly stable.

Meanwhile, output prices increased at the fastest pace in almost three years.

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.

The PMI fell to 43.7 in October, from 48.6 in September, to signal a marked monthly worsening of operating conditions in the Zambian private sector.

Business conditions have now deteriorated in each of the past three months, with the latest decline the sharpest since November 2015.

Behind the marked deterioration in the health of the private sector were steep reductions in both output and new orders in October.

New business decreased for the third month running, and to the greatest extent since November 2015.

Where new orders fell, panellists reported a lack of both customers and money in circulation.

Falling new business and a depreciation of the kwacha contributed to a substantial reduction in output during October.

Moreover, the rate of contraction was the fastest since September 2016.

The reduction in new orders also contributed to a sharp fall in backlogs of work, as broadly stable staffing levels enabled companies to deplete outstanding business.

Latest data signalled a pick-up in inflationary pressures, with both purchase prices and staff costs rising following fractional reductions in September.

Currency weakness was the main factor leading purchase costs to increase, according to panellists.

Kwacha weakness and higher fuel costs reportedly led companies to increase their selling prices in October.

Charges rose at a substantial pace, a marked turnaround from the fall seen in September.

Furthermore, the rate of inflation was the sharpest since November 2015.

Companies responded to falling demand by reducing their purchasing activity for the first time in three months.

Stocks of purchases also decreased.

The average time taken for suppliers to deliver inputs shortened for the eleventh successive month, albeit to a weaker extent.

Panellists indicated that their suppliers were reliable and always delivered products on time.

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