Mozambique’s private sector sees modest growth in July – PMI

Mozambique’s private sector experienced modest growth in July 2024, according to the latest Standard Bank Mozambique Purchasing Managers’ Index (PMI).

The PMI remained above the 50.0 mark for the third consecutive month, indicating a slight improvement in business conditions, though the index dropped to 50.6 from 51.0 in June.

New orders increased for the sixth consecutive month but at a slower pace, driving increased business activity in agriculture, manufacturing, and wholesale and retail sectors. Employment growth accelerated to its highest rate in over a year, while purchasing activity saw marginal gains, though input stocks fell for the first time in three months.

Cost pressures remained subdued, with only slight increases in purchasing and staff costs, allowing companies to keep selling prices stable. Supply chains continued to improve with reduced lead times for inputs.

Despite these positive signs, business confidence dropped to its lowest level since October 2020, with only 35 per cent of businesses optimistic about future activity. The outlook is clouded by intermittent foreign exchange supply, fiscal pressures, tight financing conditions, and subdued investment, contributing to a forecasted GDP growth deceleration to 3.6 per cent this year.

Fáusio Mussá, Chief Economist at Standard Bank, highlighted ongoing challenges, including monetary policy normalisation and high cash reserve requirements, which could keep financing conditions tight for the foreseeable future.

Attribution: Standard Bank Mozambique PMI®