Business activity in Mozambique fell at a substantial pace in June – Standard Bank

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Business activity in Mozambique fell at a substantial pace in June – Standard Bank

12:26 CAT | 09 Jul 2020

File photo: Lusa

Business activity at Mozambican firms fell at a substantial pace in June, overwhelmingly because of the coronavirus pandemic and the lockdown measures in place throughout the month, the Standard Bank PMI Index consulted yesterday by Lusa reads. [Access the full document HERE.]

The headline PMI (Purchasing Managers’ Index) figure was 41.7, “its highest in three months, improving further from the record low seen in April”.

“Nevertheless, the reading signalled a steep decline in business conditions, as key indices such as output, new orders and employment all remained below the neutral 50.0 mark,″ the Standard Bank analysis reads.

The PMI Index improved slightly in May, from 37.1 to 40 points, but remained in negative territory due to the “serious impact” of the pandemic on the Mozambican economy.

Many companies have closed in the past month, while others have seen sharp declines in demand. Employment figures have also declined, albeit slightly.

“Despite a third successive month of weak activity and demand in Mozambique,
business confidence regarding future output remained strong. Most firms noted that they still expect to grow over the next 12 months, provided the lockdown is lifted soon,” the analysis states.

Standard Bank notes that efforts to cut production costs resulted in a decline in wages in the private sector at an unprecedented rate in June.

“Overall input costs fell for the third consecutive month, helped by a drop in supplier prices,” the PMI Index notes.

Vendors continued to face difficulties in supplying businesses during the countrywide lockdown, leading to a further increase in delivery times.

Source: Lusa