Mozambique: PMI index in positive territory for six months

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Mozambique: PMI index in positive territory for six months

2:09 CAT | 15 Nov 2024

File photo: Lusa

Mozambique’s Purchasing Managers Index (PMI) business activity index remained positive in October for the sixth consecutive month, although falling slightly compared to September, according to Standard Bank, which conducts the survey.

“The headline PMI saw a slight dip in October, falling from 50.3 in September to 50.2,” reads the study, consulted today by Lusa.

It is added that, “as has been observed in every month since April, Mozambican businesses raised their activity levels at the beginning of the final quarter of 2024”, indicating that “output mainly increased due to improved sales and rising client demand”.

“Despite picking up from September, the upturn in output was only marginal. New work intakes expanded for the ninth month in a row. The rate of growth was moderate and the slowest since April, amid some demand weakness in the service sector,” it says.

It is also noted that, “with sales growth slowing, firms indicated weaker momentum on hiring in October” and that “total employment was barely changed from the previous survey period, with overall the softest rise for nine months”.

“Business conditions across Mozambique expanded only slightly in October, as firms again registered a slower increase in new work. The weakening of growth almost eradicated hiring gains across the private sector, although output levels increased further. While businesses remained hopeful for the upcoming year, confidence was at one of its lowest levels since late 2020,” the study reads.

This index had risen in February, to 50.7 points, for the first time in five months, then also recording the highest growth since July 2023, but returned to negative territory in March (49.7 points), rising in April (49.9 points). Since May (50.9 points) it has been in positive territory, but fell in September to 50.3 points, compared to 50.9 points in August, falling again to 50.2 points in October.

“Recurrent delays on liquefied natural gas (LNG) projects imply that foreign direct investment (FDI) will likely remain low, which implies limited support to foreign exchange supply and to fiscal spending, and softer GDP growth,” comments the chief economist of Standard Bank Moçambique, Fáusio Mussá, quoted in the study.

He also admits that “the ongoing tense post general election environment could prompt the Banco de Moçambique to adopt a more prudent approach to monetary policy normalization”, referring to the demonstrations that have been taking place in the country for more than three weeks, contesting the announced results of the general elections of October 9.

PMI indicators above 50 points point to an improvement in the conditions of companies in relation to the previous month, while indicators below this value show a deterioration.

The Purchasing Managers Index, published monthly by Standard Bank, collates responses from purchasing managers at a panel of around 400 private sector companies.

READ: Employment growth nearly stalls in October amid weaker rise in sales – Standard Bank Mozambique PMI

Source: Lusa