PRIVATE SECTOR SLAMS BRAKES ON DOWNTURN

As conditions record slowest decline in seven months.

LUSAKA, ZAMBIA – Stanbic Bank Zambia’s Purchasing Managers’ Index (PMI) for September indicates that the rate of slowdown in Zambia’s private sector eased at its fastest rate since the COVID-19 outbreak.

The monthly index – which is compiled in collaboration with IHS Markit – showed that Government’s decision to ease COVID-19 restrictions to stimulate economic activity was yielding results in that the local private sector had recorded a softer reduction in output, new orders and employment while business confidence strengthened. 

Stanbic Bank Zambia Head of Global Markets, Victor Chileshe said “The headline PMI rose to 46.6 in September from 43.4 in August.”

The headline figure derived from the survey is the Purchasing Managers’ Index (PMI). Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.

Mr Chileshe noted that the reading continued to signal a deterioration in business conditions at the end of the third quarter of 2020, but the decline was the softest since February.

"The rise in this month’s PMI is an indication of the improving business conditions as economic activity peaked since the outbreak of Covid-19 earlier this year."

“On the price front, currency weakness led to a sharp increase in purchase costs, in turn resulting in the fastest rise in output prices since March.”

A number of indices in the latest survey were at their highest since the outbreak of COVID-19 earlier in 2020. Output decreased at the slowest pace in seven months amid looser COVID-19 restrictions. That said, the pandemic continued to be a key factor behind falling activity, with a lack of money in circulation and currency weakness also mentioned by panellists.”

Further, new orders fell for the nineteenth consecutive month in September, albeit at the slowest pace since February.

The rate of decline was much softer than May's record, but panellists continued to report a lack of demand. On the employment front, there were signs of imminent stabilisation as the rate of job cuts softened for the second month running.

IHS Markit Economics Director, Andrew Harker noted that: “The vast majority of respondents (91%) kept workforce numbers unchanged. Companies continued to record falls in backlogs of work, extending the current sequence of depletion to six months.”

He added that a depreciating Kwacha against the US dollar led to a sharp increase in purchase prices while the rate of inflation accelerated to a seven-month high - resulting in a marked rise in overall input prices, in spite of a slight fall in staff costs.

Output charges also rose sharply as companies passed on higher input costs to their customers. The increase in selling prices was the second in as many months, and the fastest since March.

Purchasing activity continued to fall, but at a reduced pace. Ongoing travel restrictions due to COVID-19 meant a further lengthening in the time taken to receive purchased items from suppliers.

Despite the continued decline in overall conditions, the major takeaway from last month’s PMI is that the degree of confidence regarding the 12-month outlook for business activity was at a seven-month high in September as sentiment continued to recover.  

-Ends-

About Stanbic Bank Zambia

Stanbic Bank Zambia is part of the Standard Bank Group, Africa’s largest bank by assets.

Standard Bank Group reported total assets R2.3 trillion (about USD163 billion) at 31 December 2019, while its market capitalisation was R277 billion (USD20 billion).

The group has direct, on-the-ground representation in 20 African countries and in 5 global financial centres. Standard Bank Group has more than 1 100 branches and 9 000 ATMs in Africa, making it one of the largest banking networks on the continent. It provides global connections backed by deep insights into the countries where it operates.

Stanbic Bank Zambia is the largest bank in Zambia by balance sheet and provides the full spectrum of financial services. Its Corporate and Investment Banking (CIB) division serves a wide range of requirements for banking, finance, trading, investment, risk management and advisory services. Corporate and Investment Banking delivers this comprehensive range of products and services relating to: investment banking; global markets; and global transactional products and services.

Standard Bank’s corporate and investment banking expertise is focused on industry sectors that are most relevant to emerging markets. It has strong offerings in mining and metals; oil, gas and renewables; power and infrastructure; agribusiness; telecommunications and media; and financial institutions.

Stanbic Bank Zambia’s Personal and Business Banking unit (PBB) offers banking and other financial services to individuals and small-to-medium enterprises. PBB serves the increasing need among Africa’s small business and individual customers for banking products that can meet their shifting expectations and growing wealth.

For further information, go to http://www.stanbicbank.co.zm/

Gillian Langmead at Langmead & Baker Ltd;

+260 979 060705;

[email protected]