Standard Bank’s Purchasing Managers Index™ (PMI™) revealed moderate growth in the country’s private sector in July. The index stood at 50.6, slightly below the 51.0 recorded in June, but still above the 50.0 threshold, which indicates continued expansion.
According to a statement from Standard Bank, companies continued to generate new increases in sales, which contributed to growth in production, employment and purchasing activity. However, the report points out that the pace of growth has shown signs of slowing. The chief economist at Standard Bank Mozambique, Fáusio Mussá, noted that “the PMI, despite remaining above 50.0, signals a less marked improvement in business conditions.”
In July, new orders increased for the sixth consecutive month, driven by market demand and the attraction of new clients. However, the rate of expansion slowed to the lowest level in three months. The economist commented that “growth in new orders continued, but the pace was the slowest in three months.”
Business activity also grew, with companies responding to the increase in new orders by expanding production. The document pointed out that “production growth was moderate, with the agriculture, secondary and wholesale and retail trade sectors standing out.”
Employment rose for the sixth month in a row, with job creation accelerating to the highest level in just over a year. Fáusio Mussá noted that “the increase in employment was significant, especially in the agriculture and trade sectors.”
The report revealed a decline in future expectations, with the business expectations sub-index falling to its lowest level since October 2020. The combination of an intermittent foreign currency supply, persistent fiscal pressures and tight financing conditions could contribute to slower economic growth. The economist noted that “the downward revision of growth forecasts for 2024, now estimated at 3.6 per cent, reflects current economic conditions and expected inflation of 5.1 per cent at the end of the year.”
Despite the slight increase in purchasing activity, stocks of means of production fell for the first time in three months. Inflationary pressures remained moderate, with purchasing and personnel costs rising slightly. The statement concludes that “the maintenance of production prices, despite rising costs, reflects careful management of inflationary pressures.”
Standard Bank Mozambique’s PMI continues to show moderate growth in the private sector, with a decrease in business expectations, suggesting a slowdown in the pace of expansion over the coming months, concludes the official note.
