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Zambia’s business conditions have improved for the first time in four months and the most pronounced since December 2021.
This reflected renewed expansions in output, new orders, employment and stocks of purchases, according to the latest Stanbic Purchasing Managers Index (PMI).
The headline PMI moved back to above the 50 no change mark in January to signal a strengthening in the health of private sector at the start of the year.
At 50.6, the index was up from 48. 3 in December 2022.
Read more: Businesses face toughest conditions in 22 months -PMI index
Stanbic Bank Head of Global Markets Victor Chileshe said business conditions improved significantly in January and the strongest jump since December 2021.
“This was spurred by strengthening demand, higher customer numbers and competitive pricing, hence provided optimism that economic conditions will continue to improve over the year,” Chileshe said.
According to a survey, the Zambian private sector made a positive start to 2023, with January seeing renewed increases in output, new orders, employment and purchasing activity.
It further stated that business confidence improved markedly.
This also saw an increase in input costs and output prices
“The strengthening of overall conditions reflected renewed expansions in output, new orders, employment and stocks of purchases,” it stated.
The survey indicated that the new business increased for the first time in four months amid signs of strengthening demand, higher customer numbers and competitive pricing.
It stated that the rise in new orders was slight, but the most marked since February 2022.
Higher new orders fed through to an expansion in business activity, also the first in four months.
Output increased in the agriculture and services categories, but decreased across manufacturing, construction and wholesale and retail.
“Hopes that economic conditions will continue to improve over the course of the year supported a jump in confidence regarding the 12-month outlook for business activity.
“Sentiment was the strongest in 13 months, albeit still softer than the series average,” it stated.
The survey indicated that with confidence up and new orders increasing, companies expanded their staffing levels and purchasing activity in January.
Employment rose for the first time in three months, while input buying increased for the first time since last September.
Data also signalled a renewed rise in inventories.
Despite an expansion in capacity, the survey indicated that backlogs of work also increased.
“Some firms linked rising outstanding business to higher new orders, but others mentioned delays caused by power cuts,” it indicated.
Overall input prices increased at a solid pace in January, and one that was the fastest in nine months.
Inflation was signalled across all five broad sectors, and most pronounced at construction companies.
The overall rise reflected a renewed increase in purchase prices, plus ongoing staff cost inflation.
Panellists largely attributed the rise in purchase prices to higher fuel costs and currency weakness.
The survey indicated that efforts to maintain profit margins in the face of rising cost burdens meant that companies increased their selling prices in January following no change in December.
It further stated that the suppliers’ delivery times shortened at the start of the year, thereby ending a six-month sequence of deteriorating vendor performance.
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