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Zambian private sector returns to growth

Zambian private sector returns to growth

April 07
21:33 2018

 By Gillian Langmead at Langmead & Baker Ltd;+260 979 060705;

Stanbic’s PMI registered 50.7 last month, which indicates a moderate improvement in business conditions

LUSAKA, ZAMBIA – Having deteriorated in February, the latest Purchasing Managers’ Index (PMI) survey data from Stanbic Bank and IHS Markit signalled a marginal improvement in the health of the Zambian private sector during March.
The index posted a value of 50.7 points, up from 47.1 points in February. Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.
After a decline mid-quarter, growth was driven by a solid rise in new business as client demand recovered and the cholera outbreak eased.
However, output continued to decline for the third month running, albeit at a significantly slower pace from the previous month.
Meanwhile, insufficient funds aided contraction in workforce numbers and purchasing activity ending an 11-month sequence of expansion as inflationary pressures accelerated. Additionally, input costs were boosted by higher fuel prices and unfavourable exchange rates resulting in a sustained rise in average selling prices which also played a part in firms cutting the size of their labour force for the first time in 11 months to limit costs.
Victor Chileshe, Head of Global Markets at Stanbic Bank, said: “The bounce-back in March’s PMI is a clear indication that the economy has weathered the cholera outbreak and it will be business as usual going forward. Anecdotal evidence largely attributed the resurgence to higher underlying demand amid a larger client base.”
He added that: “We, however, remain concerned with the prices of inputs, particularly after March. Year-on-year inflation backed up 100 basis points to 7.1% while exchange rates, particularly the ZAR/ZMW currency pair continued the unfavourable trend from February.”
On the other hand, inventories accumulated in March due to dampened business activity.
“Increased purchase and staff costs were behind the sustained rise as firms faced higher fuel prices and continued to motivate workers through higher pay thus pushing output prices upwards at the fastest rate in 14 months,” explains Mr Chileshe.
Meanwhile, improved infrastructure and efforts by vendors to attract customers led to a reduction in supplier delivery times for the fourth month in succession.
Having seen the tail end of the cholera outbreak coupled with March’s PMI rebound, the economy is expected to maintain a healthy trend despite the persistent inflationary pressures and poor exchange rates. – About Stanbic Bank Zambia Limited
Stanbic Bank Zambia Limited is part of the Standard Bank Group, Africa’s largest bank by assets.  The Standard Bank Group, with strong African roots and leader in emerging markets, has on-the-ground representation in 20 African countries
Stanbic Bank Zambia Limited is the largest bank in Zambia by balance sheet, offering a full range of banking and related financial services. The Bank is well capitalized and its capital position is above the regulatory minimum.
The Bank which has close to 60 years’ operating experience has a huge network of branches countrywide offering full spectrum of financial services from retail to corporate and investment banking
Our strategy is to be the leading financial services organisation in, for and across Zambia, delivering exceptional client experiences and superior value. We believe we can achieve this as Zambia is our home, we drive her growth. The Bank has been an integral part of the Zambian economy and is a leading player in the country’s financial services sector.

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