Zambia Private Sector Returns to Contraction

The Stanbic Bank Zambia PMI dropped to 49.3 in March 2025 from 50.9 in February, signaling a renewed contraction after three months of improvement. The decline was driven by falls in output and new orders, as firms cited weaker demand and difficulties securing business. While manufacturing showed some resilience, agriculture saw a notable drop in orders. Despite subdued demand, employment growth continued at a modest pace as firms managed capacity constraints, though confidence in future output softened. On the price front, inflationary pressures eased, with purchase and staff cost increases slowing to their softest rates since early 2024. Selling price inflation also weakened to a 19-month low, as firms adjusted pricing to boost demand. Meanwhile, supplier delivery times improved for the third month, matching levels last seen in September 2023. Looking ahead, businesses remain cautious, balancing cost management with efforts to sustain growth.

The Stanbic Bank Zambia PMI stood at 50.9 in February 2025, unchanged from January’s 18-month high, signaling a third consecutive month of private sector expansion.The increase in new orders continued to drive the improvement, as firms cited strong client demand and a more stable power supply. Notably, business activity rose for the first time since November 2023, though the expansion was limited to the agricultural sector. Despite rising demand, employment growth slowed, with firms raising staffing levels only fractionally. Meanwhile, cost pressures intensified, as purchase prices and wages increased, driven by kwacha depreciation and cost-of-living adjustments. In turn, selling prices rose at the fastest pace since September 2024, as firms passed higher costs onto customers. Looking ahead, business confidence improved, reaching its highest level since July 2024, as firms anticipated greater output, investment in new products, and continued stability in electricity supplies.