November PMI indicates stabilization in private sector

BUUMBA CHIMBULU writes @SunZambian BUSINESS conditions in Zambia’s private sector neared stabilisation in November, sustained by an improvement in demand. Although the Zambian economy has been unable to score a 50 mark since February 2019, the past three months have shown a reduction in the rate at which it has been contracting since the advent of Covid-19. Purchasing Managers’ Index (PMI), stood at 49.3 in November, rebounding from October’s 48.9, but staying below the 50-mark separating expansion from contraction. Readings in the PMI above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration. This is according to the latest Stanbic Bank Zambia IHS Markit PMI. Commenting on the readings, Stanbic Bank Zambia Head of Global Markets, Victor Chileshe, said input costs continued to rise in November albeit at the slowest pace in three months. Mr Chileshe explained that this was mainly attributed to the relative weakness of the Kwacha against the United States Dollar. “Despite the currency having stabilised, the challenge has been the South African Rand continues to post gains against the US Dollar resulting in increased prices of imports from South Africa. Imports from South Africa are a sizable portion of the import basket,” he said. Mr Chileshe said efforts to limit expenses contributed to a fall in employment, the tenth in as many months. Moreover, he said, the rate of job cuts quickened from that seen in October. Mr Chileshe said there was some confidence that as business conditions improve, activity would increase in 2021 as the pandemic passes. He however noted that sentiments remained historically muted amid continued challenging business conditions. “Companies in Zambia raised their selling prices for the fourth month running as higher cost burdens were passed on to customers. The rate of inflation was solid but eased to a three-month low,” Mr Chileshe said.