▪ Slower reductions in both new orders and output
▪ Employment decreases for first time in eight months
▪ Weaker increase in output prices
In recent months, Zambia’s private sector witnessed reductions in both new orders and outputs since July 2018. However, the decline in new orders has softened to its weakest rate in four months, according to Stanbic Bank Zambia PMI news release issued in Lusaka, Zambia issued on 5 February 2019.
The Purchasing Managers’ Index (PMI) is an indicator of the economic health of the manufacturing sector. The PMI is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.
The country has recorded a PMI Index below 50 since the beginning of the downturn, according to data compiled by Stanbic Bank Zambia PMI survey published in Lusaka. This is a signal of the economy contracting that has been detected following the increase in output prices and decreases in workloads that has subsequently seen companies shed off staff to cope. This has been worsened by the Zambian kwacha weakening against the US dollar by 20% in the last year, tracked on the Bloomberg Terminal on currencies.
A weaker fall in new orders was registered in January, with the rate of contraction easing for the third consecutive month to the slowest since last September. Some panelists reported a continued lack of customers, although others indicated that they had been able to secure new clients, according to the news release statement issued by the bank.
“Although higher fuel prices and currency weakness resulted in a sharp monthly increase in input costs, the rate of output price inflation moderated, which may be a sign that threats to a rise in consumer inflation are subsiding especially since Usd-Zmw remains stable”, stated Stanbic Bank Zambia Head of Global Markets, Victor Chileshe, in a press release on February 5, 2019.
At their first Monetary Policy Committee (MPC) press briefing in February 2019, the Central Bank announced that they decided to hold the policy rate at 9.75% following inflation containment within the 6% to 8% range. “While some indicators show positive growth in economic activity, growth continues to be subdued”, Dr Denny Kalyalya said in his speech at the MPC press briefing at the Central Bank in Lusaka.
The central bank has for months been reporting during their MPC announcements that annual inflation rate was targeted between 6% and 8%. By January 2019, annual inflation rate has slowed from 7.9%, in a statement issued by Iven Sikanyiti, acting director of Census and statistics at Zambia’s statistics agency to Bloomberg.