Sales growth returns in October, driving output and employment gains – Mozambique PMI

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Sales growth returns in October, driving output and employment gains – Mozambique PMI

4:49 CAT | 05 Nov 2025

File photo: VOA Português

Key findings

Business activity rises for fourth month running

New orders increase after slight fall in September

Firms expand their staffing and purchases

Private sector conditions in Mozambique improved for the first time in three months in October, supported by renewed growth in new business and greater increases in both activity and employment. Purchases of inputs also rose, though inventories declined further.

Input price pressures accelerated in October, with businesses reporting the sharpest rise in costs since April. However, this appeared to have little impact on selling prices, which increased at a slower pace than in September. Meanwhile, confidence in future activity decreased slightly, reaching its lowest level since February.

The headline figure derived from the survey is the Purchasing Managers’ Index™ (PMI®). Readings above 50.0 indicate an improvement in business conditions compared to the previous month, while readings below 50.0 show deterioration.

The headline index rose to 50.4 in October, up from 49.4 in September. Moving above the 50.0 neutral mark, the index signalled the first improvement in the health of Mozambique’s private sector since July, although the rate of improvement was marginal.

Central to the upturn was a fresh rise in new business intakes, which matched July’s rate as the joint-strongest increase in just over a year. Survey respondents frequently attributed this growth to winning new clients amid a broad strengthening of market demand.

As order books improved, Mozambican firms expanded their output for the fourth consecutive month. The pace of activity growth accelerated from September, reaching its fastest since July.

Increases in output and sales were mainly driven by the construction and services sectors in October. Notable gains in these parts of the private sector somewhat masked more subdued performances observed in manufacturing, wholesale & retail, and agriculture.

The improvement in business conditions prompted a more growth-focused approach to hiring and procurement. Employment levels rose for the fifth consecutive month, at the joint-fastest rate since July 2024 (alongside August). Purchasing activity accelerated as firms highlighted increased input requirements and purchases related to new product launches. Inventories were still reduced, but at the slowest pace observed in six months.

Backlogs of work rose notably for the first time since June, although capacity pressures remained relatively mild. This came amid another strong improvement in supply chain performance in October, with lead times shortening at the second-fastest rate in a year and a half.

Regarding prices, October data showed a faster rate of input cost inflation in Mozambique’s private sector. The pace of increase accelerated for the second consecutive month but remained modest overall. October saw increases in purchase prices amid strengthening material demand, alongside an uptick in staff wages. Despite this, output prices rose at a slower rate than in September.

Looking ahead, business confidence towards future activity declined in October to its lowest level in eight months. Nevertheless, overall sentiment remained strongly positive, with respondents citing plans for business development and hopes of gaining new customers and contracts in the coming months.

Comment

Fáusio Mussá, Chief Economist – Mozambique at Standard Bank, commented:

“The Standard Bank Mozambique PMI rose to 50.4 (seasonally adjusted) in October, up from 49.4 in September.

“Most PMI sub-indices were at or above 50, indicating month-on-month expansions in economic activity in October and suggesting the private sector recovery continues.

“However, inventories declined for the sixth consecutive month, implying that private sector companies are still struggling to replenish stocks. Additionally, the foreign exchange (FX) market continues to experience significant supply-demand imbalances, affecting private sector companies’ ability to replenish stocks, considering Mozambique’s high reliance on imports.

“Nevertheless, USD/MZN stability is still supporting a benign inflationary environment despite increased risks. Even though the PMI recorded increased input price pressures in October, there was limited pass-through to selling prices, which rose at a softer pace than in September.

“PMI readings above the 50-point benchmark indicate month-on-month economic growth. Mozambique’s economy experienced negative GDP growth in Q4 2024, Q1 2025, and Q2 2025. We expect GDP growth to turn positive from Q4 2025, supported by robust base effects.

“Despite increased risks to macroeconomic stability stemming from entrenched fiscal and FX liquidity pressures, the October PMI shows business sentiment remains positive. The PMI future business expectations sub-index remains above 50, likely supported by progress in liquefied natural gas (LNG) projects.”

Source: Standard Bank Mozambique PMI