Ghana Private Sector Returns to Growth in August – PMI
Ghana experienced improved business activity in August with increase in new orders which prompted job creations.
There were tentative signs of improvement in Ghana’s private sector during August, according to S&P Global purchasing manager index (PMI) report.
PMI rose to 51.1 in August 2024, from 50.1 in the prior month, marking the first month of expansion in the country’s private sector in three months.
According to the report, inflationary pressures softened, but there were still sharp increases in purchase costs and output prices.
The latest PMI reading pointed to a slight improvement in the health of the private sector. Business activity returned to growth in August, rising marginally after having declined in the preceding two months.
S&P said respondents linked higher output to increases in new orders and successful marketing activity. New orders were up for the second month running, and at a solid pace that was the fastest since December.
Companies linked growth to improving client demand, and some signs of inflationary pressures easing. In fact, the pace of overall input cost inflation eased to a six month low in August and was softer than the series average.
Both purchase prices and staff costs rose at slower rates, albeit the former continued to increase rapidly amid higher costs for raw materials and transportation and ongoing currency weakness.
Output price inflation also softened, easing for the second month running to the weakest since March. The latest increase was still sharp, however, as companies passed on higher input costs to their customers.
The solid rise in new orders and business expansion plans led companies to expand their staffing levels again during August, extending the current sequence of job creation to seven months.
Moreover, the latest rise was the fastest in 2024 so far. Job creation helped firms to keep on top of workloads despite a sharper increase in new orders. As such, there remained a lack of pressure on capacity and companies were able to reduce their backlogs of work again during the month.
In contrast to the picture for employment, companies lowered their purchasing activity in August following a rise in the previous survey period. Some respondents indicated that they had sufficient inputs after having expanded purchasing in July, and recorded a second successive accumulation of inventories.
The modest rise in stocks of purchases in part reflected efforts to secure inputs ahead of expected future price rises. There was a solid improvement in vendor performance, with the latest shortening of suppliers’ delivery times the most marked since April.
Hopes for more signs of stability in the exchange rate and prices led to an optimistic outlook with regards to business activity over the coming year. Some firms also predict that business will pick up following the election period later this year.
Business confidence improved from the previous survey period and was above the series average as close to 77% of respondents predicted that their output will expand.
Andrew Harker, Economics Director at S&P Global Market Intelligence, said: “The nascent growth seen in Ghana’s private sector in July was built on in August as new orders and employment increased at faster rates, while business activity returned to expansion mode.
Signs of revitalisation in the economy have coincided with rates of inflation coming off the boil, and so firms will be hoping that this continues in the months ahead to help facilitate a positive end to the year.” #Ghana Private Sector Returns to Growth in August – PMI
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