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Standard Bank: “Business Activity Index Rose in April, but Remains Negative”

Standard Bank: “Business Activity Index Rose in April, but Remains Negative”

Standard Bank’s Purchasing Managers Index™ (PMI™) revealed that business activity in Mozambique rose in April to 49.9 points, influenced by growth in employment. However, it remains in negative territory.

‘The index rose in February to 50.7 points, but returned to negative territory in March, settling at 49.7 points, registering a slight rise in April to 49.9 points. PMI indicators above 50 points point to an improvement in business conditions compared to the previous month, while indicators below this value show a deterioration,’ explained the document released on Tuesday (7) by Lusa.

According to the document, ‘further improvements in demand conditions contributed to a new period of expansion in business activity in the private sector at the start of the second quarter of the year, where, in turn, employment also increased, but purchasing activity and inventories decreased. At the same time, inflation rates remained relatively moderate.’

According to the Standard Bank study, ‘the services sector was the main driver of growth, while the secondary sector recorded the weakest figures. New business increased for the third month in a row due to improved demand conditions, which helped companies capture new orders from both new and existing customers.’

It was also pointed out that ‘the pace of expansion in April was modest but faster than in March and that expectations of further improvements in terms of new orders in the coming months boosted confidence regarding the annual outlook for business activity’.

Commenting on these results, Standard Bank Mozambique’s chief economist, Fáusio Mussá, said that price pressures continue to ease. However, companies are facing difficulties in obtaining foreign currency to meet their foreign payment needs, which may have limited their ability to increase stocks.

‘Although we maintain our year-end inflation forecast of 5.9 per cent year-on-year for 2024, we have reduced our inflation forecast for the end of the second quarter to below 3 per cent in the same terms, due to weaker aggregate demand,’ he said.

The Purchasing Managers Index (PMI), published monthly by Standard Bank, is the result of responses from purchasing managers from a panel of around 400 private sector companies.

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