THE cholera outbreak and the depreciation of the kwacha against the US dollar combined to dampen business demand, Stanbic Bank Purchasing Managers Index (PMI) survey reveals.
According to the index and IHS Markit, business conditions in Zambia’s private sector faltered for the first time in eight months.
“Although new orders and employment continued to grow in January, the cholera outbreak, the stronger rand and the depreciation of the kwacha against the US dollar combined to dampen demand,” the index revealed.
It is stated that the PMI registered 50.7 last month, which indicates a moderate improvement in business conditions, but trails December’s 52.9 and November’s 54.7.
“Readings above 50.0 signal an improvement on the previous month, while those below 50.0 show a deterioration. Overall, just under 45 per cent of firms recorded a fall in output. There were reports of a lower customer turnout, with some panellists linking this to the recent cholera outbreak. The lower turnout also halted purchasing activity. As a consequence, inventories were left unmoved,” Stanbic stated.
And Victor Chileshe, who is the head of Global Markets at Stanbic Bank Zambia, said: “The effects of the cholera outbreak and the measures taken thereafter by government have had a significant impact on business activity in January. Higher purchase costs are likely to have been largely driven by a strong rand, which has appreciated by 15 per cent over the past three months. The rand is a significant component of Zambia’s import basket.”