Business conditions hit their strongest rate in 2018

Filed under: Business,Latest News |
666 Views

The latest Stanbic Bank Purchasing Managers’ Index (PMI) data signals an overall improvement in private sector conditions for a third straight month, posting a headline figure of 52.3 in May, up from 51.2 the previous month – the highest growth observed in 2018.

Business activity rose for the second month in succession during May, and at an accelerated pace. Having accelerated from the prior survey period, the rate of expansion hit a six-month high. Stronger market conditions were underpinned by a record increase in new orders with firms reporting a subsequent rise in business activity while both purchasing activity and stock levels rose.

Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show deterioration.

On the other hand, supplier delivery times shortened at the fastest pace on record as businesses reduced their workforce mid-quarter.

After adjusting for seasonality, there was a modest decline in outstanding business in the Zambian private sector during the survey period extending the current sequence of decline to five months.

Meanwhile, price pressures grew with both purchase prices and average staff costs rising thereby inflating output prices at an accelerated, albeit modest, pace.

Further, the pace of output growth, the fastest since November, was attributed to stronger demand. Stanbic Bank Head of Global Markets, Victor Chileshe said Improvements in business conditions in May were yet again underpinned by a record increase in new business.”

“As we had indicated in April, there has been a rise in input prices in May. The rise was the fastest in four months. This rise has modestly influenced the modest increase in selling prices,” said Chileshe.

“Pressure on the local unit remains thus it is reasonable to expect continued inflationary pressure on both input and output prices.”

He added that expansions in the customer base led to larger volumes of new orders during May.

“The rate of increase was substantial and the most marked since the survey’s inception and purchasing activity and stock levels rose accordingly.”

Businesses stated that higher demand and efforts to increase output influenced the respective expansions. However, May data marked the second decline in the labour force in three months, although the rate of job shedding was only marginal.

Meanwhile, following a reduction in prior survey period, May saw cost pressures return in the local private sector with both purchase prices and staff costs contributing to the overall rise in input prices. According to the index’s panel, higher fuel prices and stronger demand were behind higher costs. In response to the rise in input costs, Zambian private sector firms reported an increase in average selling prices mid-quarter, though the pace of inflation was only modest.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.