Output falls at faster pace in Zambia, but contraction in new orders eases
Staff Writer |
Companies in Zambia experienced a further deterioration in business conditions in December, ending a challenging second half of 2018.
Article continues below
The rate of decline in new business continued to soften amid some signs of improving client numbers, but output fell at a faster pace.
On a more positive note, companies continued to take on extra staff.
Inflationary pressures continued to build at the end of the year, with overall input costs increasing at the fastest pace since March 2017.
The rate of output price inflation also quickened, and was elevated for the third month running.
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 signalled a solid monthly deterioration in business conditions in the Zambian private sector.
Operating conditions have now decreased in five successive months.
Output fell at a sharp and accelerated pace in December, with slow business and a lack of money in the economy highlighted again by panellists.
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.
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.
Purchase costs, meanwhile, increased at a sharp and accelerated rate, with inflation quickening to a 23-month high.
Higher fuel costs and currency weakness were the principal factors leading to rising purchase prices.
These factors were also central to the latest increase in output prices, which rose sharply for the third successive month.
Moreover, the rate of charge inflation quickened from that seen in November.
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. ■