Mozambique: July business activity saw strongest growth for two years – PMI

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Mozambique: July business activity saw strongest growth for two years – PMI

6:07 CAT | 07 Aug 2025

File photo: Lusa

Economic activity in Mozambique recorded its strongest growth in two years in July, with employment also rising for the second consecutive month, according to the PMI index released on Tuesday by Standard Bank.

“Business conditions in Mozambique improved for the first time in three months during July, as activity expanded strongly in response to greater levels of new business,” reads the study, which highlights “that rate of activity growth was the sharpest seen in two years”.

“Employment also rose, marking the second consecutive monthly uplift, although purchases and inventories of inputs both decreased. Selling charges were unchanged following back-to-back rises, as firms aimed to keep prices steady amid a benign cost environment,” the study, conducted by Standard Bank, also said.

The PMI (Purchasing Managers Index) rose from 50.2 in March to 50.5 in April, remaining above the neutral figure of 50 for the third consecutive month, but fell to 49.6 points in May and 49.1 in June, returning to positive territory in July at 50.7.

PMI indicators above 50 points point to an improvement in business conditions compared to the previous month, while indicators below this figure show a deterioration.

“The index signalled a marginal improvement in the health of the private sector economy. Firms in Mozambique enjoyed an increase in sales at the start of the third quarter, as demand conditions picked up following softness in June,” the PMI study points out, adding that “the upturn in new business was the sharpest observed since September last year, with panel members relating this to larger orders, new clients and improved supply conditions.“linking this to larger orders, new customers and better supply conditions”.

The data also show that companies “expanded their output over the course of July”. Furthermore, “the rate of growth was solid and the most pronounced in exactly two years.”, with construction leading the upturn, as respondents highlighted new projects and improved productivity”.

“Output rose in all other sectors, except for wholesale & retail where total activity was stable.. Higher sales led to an increase in employment across Mozambique’s private sector in July,” the study said, stressing that “a rise in workforce capacity helped firms to reduce their backlogs to the greatest extent in almost two years”.

Quoted in the study, Standard Bank chief economist Fáusio Mussá said that the July indicator “suggests a recovery in economic activity” at the beginning of the third quarter of 2025, with “ month-on-month (m/m) expansions in most of the PMI sub-indices, including output, new orders, employment and supplier delivery times”.

“However, we note a decline in both purchases and inventories, which may reflect subdued foreign exchange (FX) supply impacting acquisitions,” Mussá points out.

He stresses that even though the forecast of a “slow GDP growth recovery from the post-election fallout, on recurrent fiscal and FX liquidity pressures” remains unchanged, July PMI data show “output expanding at the strongest pace in two years and across the sectors of economic activity, except for wholesale and retail trade”. Notably,”business sentiment continued to improve, with the PMI future business expectations sub-index remaining well above the 50pt benchmark”.

READ: Mozambique’s private sector records strongest increase in activity for two years -PMI

Source: Lusa