Business pulse in Africa’s copper hotspot Zambia, deteriorated sharply in the month of July as reported by the latest Purchasing Managers Index (PMI) report release on 06 August. Zambia printed a headline of 44.4, sliding deeper in contraction zone from 46.6 in June. (Readings below 50 reflect contraction while those above 50 spell expansionary growth). Private sector pulse continues to be weighed by lack of money in circulation, high input inflation that has manifested in rising selling prices on the back of the lagged effects of currency weakness. Manufacturing costs are still fairly high given elevated fuel prices coupled with weak aggregate demand.
The outlook for factory activity is still expected to detente in the coming months given stability in currency and more predictable environment.
Commenting on the readings Stanbic Bank Head of Global Markets Victor Chileshe said, “ “The current business conditions should be helped by push through effects of the reversal in kwacha weakness experienced in the prior months.”
The passing on of higher input costs to customers resulted in a similarly sharp increase in output prices. Although the rate of inflation softened from June’s 43-month high, it remained above the series average.
Hopes that economic conditions will recover over the coming year supported optimism among companies in July. More than half of all respondents predicted a rise in output, helping sentiment reach a four-month high. That said, confidence was still below the series average.