According to Standard Bank, which conducted the survey, the PMI index of business activity in Mozambique remained positive in September for the fifth consecutive month, influenced by the anticipation of new orders in light of Wednesday’s elections.
“In September, business conditions in the Mozambican private sector improved for the fifth consecutive month,” according to the study, released on Monday, “with companies continuing to receive higher volumes of new business.”
“However, a much slower increase in business activity affected performance, leading to lower job creation and a slight drop in the acquisition of means of production,” it also acknowledged.
This index rose in February (50.7 points) for the first time in five months, also registering the highest growth since July 2023, but returned to negative territory in March (49.7 points), rising in April (49.9 points). It has been in positive territory since May (50.9 points) but fell in September to 50.3 points, down from 50.9 points in August, “albeit at its lowest point in this period,” it said.
According to the study, performance in this period “was underpinned by a moderate increase in new order volumes throughout September” and Mozambican companies “indicated that introducing new services, expanding capacities and winning new customers boosted sales”.
“In addition, some panellists pointed out that next month’s general elections [9 October general elections] motivated customers to bring forward new orders. Although higher levels of new work fuelled a further expansion in business activity in September, the growth rate slowed markedly from the previous month and was only minimal,” it read.
Even so, “slower demand growth, limited financial resources and reduced imports influenced private sector activity”, but growth also “slowed” in the secondary sector, wholesale and retail trade and the services sector, “while reductions in output were observed in the agriculture and construction sectors”.
“With the slowdown in activity growth, Mozambican companies recorded a slight decline in their purchasing activity, the first since April. Job creation slowed, with the survey data marking the slightest growth in employment in five months. A reduction in acquisitions and softer growth in the workforce coincided with a further acceleration in order backlogs, which was slight but the second fastest in more than two years,” the survey explained.
The document emphasised as a “positive note” that the “decline in purchases” by companies “contributed to a slower increase in spending”, but “production expectations of Mozambican companies softened” in September, “being among the weakest recorded since the beginning of 2023”.
“Companies generally expect an increase in activity, pointing to investment, innovation and a greater market share as some of the factors motivating the positive forecasts,” the report concludes.
PMI indicators above 50 points show an improvement in business conditions compared to the previous month, while indicators below this value show a deterioration.
Quoted in the study, the chief economist at Standard Bank Mozambique, Fáusio Mussá, commented that the data “shows softer growth in production, new orders, employment, supplier delivery times and stocks of acquisitions”.
“There was a decline in business sentiment, measured by the sub-index of business expectations for the future, which remains volatile, with respondents predicting softer growth in production over the next 12 months,” he recognised.
The Purchasing Managers Index (PMI) published monthly by Standard Bank is based on the responses of purchasing managers from a panel of around 400 private sector companies.