Mozambique’s PMI index, measured by Standard Bank, fell to 48.4 in November 2024, from 50.2 in October, indicating the first contraction in the private sector in seven months. This performance reflects a generalised reduction in business volume, associated with protests and strikes following the general elections, as well as prolonged political tensions.
According to the report, weakening demand and limited company capacity were key factors in this contraction. The volume of new business, which had been growing for nine consecutive months, fell sharply in all the sectors analysed.
The drop in turnover also impacted the labour market, with employment recording its biggest decline since March 2021. Many companies implemented cost-cutting measures, including reduced hiring and staff cuts. These measures were also reflected in reduced purchasing activity and lower inventories.
Supply chains faced significant challenges, with delivery times reaching the longest levels on record. This situation was partly attributed to the closure of borders with South Africa, a crucial trading partner for the country.
On the other hand, production costs fell for the first time in a year, driven by lower expenses with suppliers and labour costs. However, sales prices rose slightly, reflecting adjustments in companies’ commercial strategies.
The business environment remains fragile, with business confidence falling to its lowest level in four years. The report highlights concerns around political instability, fiscal pressure and imbalances in the foreign exchange market as risk factors for the private sector in the coming months.
Standard Bank emphasises that the adverse economic conditions require coordinated action to mitigate the impacts of political tensions and recover the dynamism of the private sector.
