Mozambique’s Purchasing Managers’ Index (PMI) indicated that business conditions in the private sector stagnated in January 2026, due to a slowdown in order book growth. As a result, total activity increased only slightly, with some companies reporting marginal growth.
Delivery times continued to shorten, signaling reduced pressure on supply chains. At the same time, companies showed less confidence in the future outlook, contributing to a slower pace of job creation in the country.
The PMI is an indicator obtained through a monthly survey of companies, used to measure the economic health of the private sector. Values above 50 points indicate an improvement in business conditions compared to the previous month, while values below 50 points indicate a deterioration.
After improvements in the last quarter of 2025, the PMI fell to a neutral 50 points in January, down from 50.9 points in December last year. The sustained reduction in supplier delivery times contributed to this slowdown, reflecting a relaxation in supply chains.
Production levels grew for the seventh consecutive month, although the pace of expansion was the slowest in this sequence. Some companies received new orders from customers, while others experienced slow sales and difficulties due to currency shortages.
The marginal increase in new order volumes recorded in January was the weakest in four months. Nevertheless, it stimulated an expansion in purchasing activity, which remained in its longest phase of growth since mid-2022.
The growth in purchasing had an impact on prices. In January, companies reported an increase in their expenses due to rising supplier prices, driven by demand. Overall purchasing costs rose at the fastest pace in almost three years.
Companies continued to receive inputs on time, with supplier performance reaching its highest rate of improvement in 23 months, allowing them to build up inventories. For the eighth consecutive month, the number of employees increased, albeit at a slightly slower pace than in December, which saw a 32-month high.
Output prices in the private sector rose modestly, but this was the strongest increase since September 2022. This growth was mainly due to rising costs, with the exception of the construction sector, where there were reductions in production costs and prices charged to customers.
As for future activity, around a third of the companies surveyed projected growth over the next 12 months. These expectations are linked to plans for expansion, increased demand, and hiring. Despite this, overall confidence fell to its lowest level since November 2024.
Standard Bank chief economist attributes slowdown to floods
Fáusio Mussá, chief economist at Standard Bank in Mozambique, commented: “The Standard Bank PMI fell to a neutral level of 50 points (seasonally adjusted) in January, from 50.9 points in December. This suggests a temporary pause in the recovery of the private sector economy, affected by heavy rains and flooding in the current rainy season.”
The economist added: “The PMI also signals a deterioration in business prospects in January, with the future expectations sub-index falling to its lowest level since November 2024.”
He also pointed out that the relaunch of the Area 1 project, led by TotalEnergies in Afungi, Cabo Delgado, with Liquefied Natural Gas (LNG) production scheduled for 2029, could support a future recovery, although it will take time for there to be greater tax contributions and foreign exchange supply.
The expert concluded by explaining: “Our inflation forecasts for 2026 are 4.6% year-on-year and 5.6% in 2027, after closing 2025 at 3.2% year-on-year. Heavy rains may temporarily push food inflation into double digits, but with the recovery of agricultural production, it should return to single digits. We forecast a slow recovery in growth, with gross domestic product growing 1.1% in 2026, up from 0.7% in 2025.”
Source: Standard Bank Mozambique / S&P Global
