Standard Bank’s Purchasing Managers Index revealed that business activity in Mozambique rose in the month of June, influenced by strong customer demand that increased rapidly, a pace not seen since July 2023. According to the document, growth in sales and production requirements also encouraged companies.
“Sales prices rose at the sharpest rate in ten months, despite the cooling of input price pressures. 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. In June, the index rose to 51.0 points, signalling a slight improvement in the health of the private sector economy,” explained the report released by the Clube de Moçambique.
According to the report, “business activity expanded for the third month running, as companies stepped up their operations due to a greater number of clients and stronger demand conditions. The rate of growth in production was the fastest seen in 11 months, with all five sectors covered recording a recovery since May.”
According to the Standard bank study, growth in the flow of new orders also strengthened, with new requests for work. “Rising levels of demand precipitated another increase in purchasing stock levels after a seven-month period of reduction, which served to soften the business environment.”
However, “despite a stronger increase in production, jobs were contained, with a marginal new number of employees,” he added.
Commenting on the results, Fáusio Mussá, chief economist at Standard Bank, explained that despite these improvements, it was noted that the sub-index of future business expectations fell to a 16-month low, signalling that production may grow at a softer pace.
“Although the BoM cut its main monetary policy rate, by 225 basis points accumulated since the beginning of the year to the current level of 15 per cent, interest rates remained high in real terms (nominal interest rate minus inflation),” he described.
Mussá emphasised that high cash reserve ratios, intermittent foreign exchange supply and persistent fiscal pressures are subduing growth in the non-extractive sector. Credit growth for companies contracted by -16.2% in April, which pushed the contraction in credit for the economy to -7.
