Following a marginal recovering in June, the July PMI Index for Zambia was weaker in comparison following a drop to 44.4 from 46.6 as sentiment from the business survey continued to reveal soft business conditions.
“The Stanbic Bank Zambia PMI dropped to 44.4 in July 2019 from 46.6 in the previous month, signalling a fifth successive monthly deterioration in the country’s business conditions and at a sharper pace”, read the summary PMI report compiled by Markit Economics published early August 2019. “Output, new orders and employment fell further, amid a lack of money in the economy and weaker demand”.
Purchasing managers experienced a reduction in purchasing activity with some being reluctant to hold excess stock in a weak demand environment. “This led inventories to fall for the fifth month in a row”, read the report.
The pattern of weakness continues to be the same on a month by month basis. The weakness of the Zambian kwacha continued to push up prices during June, according to the June 2019 PMI report which is analogous to the drivers cited in the July Report. This has led to purchase costs rising sharply, and at the fastest pace since December 2016. In addition, this has also led to overall input prices to increase at a marked pace again, despite only a slight rise in staff costs.
IMF in a recently published report sees GDP slowing to 2% in 2019 from an estimated 3.7 in 2018, according to Jim Silver of Bloomberg. Slowing growth in GDP and weakened PMI show a correlation as seen in the chart below.