Business conditions worsened in August – Stanbic Purchasing Manager’s Index

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A private sector survey hit a six-month low in August as the Stanbic Bank/IHS Markit Purchasing Manager’s Index (PMI) came in at 49.0 – the weakest since February 2018 – indicating a renewed deterioration in overall business conditions in the country.

According to the results of the survey released by Stanbic Bank today, the downturn in business performance during August largely reflected modest falls in output volumes and new business intakes.

Commenting on August’s survey findings, Stanbic Bank Head of Global Markets Victor Chileshe said despite the worsening business conditions, firms continue to employ more people.

“August presented some headlines for businesses. A fall in customer demand, lack of money in circulation and delays in customers selling their accounts are among the things cited for the decline in business activity,” Chileshe stated.

However, despite softer demand conditions, employment increased for the third consecutive month, reflecting sustained efforts to boost business capacity.

“However firms continue to build capacity by employing more people in anticipation of an improvement in customer demand. Operating costs do continue to rise and it is a fair expectation that this costs will eventually be passed on to consumers.”

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

Although August’s headline PMI of 49.0 (down from 50.3 in July) is the lowest in six months, the rate of decline in business performance was only marginal.

Worsening business conditions primarily reflected lower levels of output and incoming new work. Anecdotal evidence cited subdued economic conditions, delays with customer payments and a lack of money in circulation as the main factors holding back client spending in August.

Private sector firms continued to boost their operating capacity during the latest survey period, as signalled by a further modest upturn in staffing levels. Higher employment numbers contributed to the sharpest fall in backlogs of work since April. Shorter lead-times from suppliers also helped to prevent an accumulation of unfinished work at private sector companies in August. The latest improvement in vendor performance was the second-fastest since the survey began in March 2015.

Purchasing activity rebounded in August, following a marginal reduction during the previous survey period. Greater input buying partly reflected efforts to build up inventories of raw materials. The latest increase in stocks of purchases was the fastest since December 2017.

Meanwhile, average cost burdens continued to rise at a modest pace in August. Higher operating expenses were driven by a combination of rising raw material costs and greater staff wages. Reports from survey respondents suggested that exchange rate depreciation was a key factor leading to increased purchasing prices in August.


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Start: 2019-07-01 End: 2019-07-31