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Sustained improvement in business conditions in Zambia

Staff Writer |
The Zambian private sector continued to experience improving business conditions in June, as signalled by the latest PMI reading.

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Business activity continued to expand amid rising customer volumes and stronger demand.

Firms also managed to secure greater new business at a strong pace.

Companies increased their staffing levels as a result, with June data marking the first rise in workforce numbers since February this year.

Moreover, purchasing activity and inventories continued to increase.

Selling prices meanwhile continued to rise in the private sector reflecting higher cost burdens and elevated fuel prices.

Moreover, rising purchase prices and staff costs contributed to input cost inflation in June.

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 headline PMI posted 51.9 in June, down from 52.3 in May.

Despite easing slightly from the previous survey period, the PMI signalled a further solid improvement in the health of the Zambian private sector.

Expansions in business activity were reported in the Zambian private sector, with firms often mentioning stronger underlying demand.

The rate of increase was solid, despite easing from May.

New orders also continued to rise at the end of the second quarter.

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 increase 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.

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