Ghana’s Private Sector Slows First Time in 3-Month
The elections that took place in Ghana in December caused a pause in business at some companies during the month, leading to slower growth of new orders and a dip in business activity, S&P said in a purchasing manager index report.
However, the report noted that employment and purchasing activity continued to rise and firms were increasingly optimistic regarding the year-ahead outlook. Input costs and output prices continued to rise sharply, but a recent improvement in the strength of the cedi acted to soften inflation.
The S&P Global Ghana Purchasing Managers’ Index™ (PMI®) dropped below the 50.0 no-change mark in December, posting 49.4 from 52.5 in November. The latest reading signaled a slight worsening in the health of the private sector at the end of 2024, ending a two-month sequence of improvement.
According to the latest PMI report, the deterioration in overall business conditions in part reflected a first reduction in business activity for three months in December.
Although price pressures contributed to the fall, anecdotal evidence suggested that the drop in output could be temporary in nature, attributed to a pause in operations during the election period. Moreover, the reduction in activity was only slight as some firms continued to raise output in response to higher new orders.
‘New business increased for the third month running, albeit only fractionally. Some firms reported that an improvement in the strength of the cedi against the US dollar had helped them to secure new orders. This recent strengthening in the currency also acted to soften inflationary pressures slightly, with purchase costs rising at the slowest pace in nine months.
That said, purchase prices still increased markedly given a previous sustained period of currency depreciation and higher fuel costs. Staff costs meanwhile rose solidly, albeit at the weakest pace since January 2024.
With input prices still increasing sharply, companies raised their selling prices accordingly. The pace of charge inflation was above the series average. Companies continued to expand their staffing levels in December amid improvements in customer demand. Employment rose for the eleventh consecutive month, albeit at a softer pace.
Meanwhile, a further slight reduction in backlogs of work was registered. Purchasing activity was also up, and for the second month running. Respondents linked higher input buying to rising new orders and efforts to build safety stocks.
These attempts were often successful as stocks of inputs were accumulated for the third month in a row, albeit modestly. Firms made sure to pay for purchased items on time in order to secure delivery slots.
This, alongside competition among suppliers, meant that lead times shortened markedly in December, and to the largest extent since October 2023.
Companies were increasingly optimistic that business activity will rise over the coming year, with December seeing the strongest sentiment for six months. Confidence was also above the 11-year series average. Hopes for more stable prices and a boost to business conditions from the incoming government were among the factors supporting optimism” FBN Holdings Records Huge Off-Market Shares Transactions
