Ghana’s Private Sector Slows First Time in 3-Month
Ghana’s private sector slowed for the first time in 3 months, according to the Purchasing Managers’ Index (PMI) S&P Global released today.
The elections in Ghana in December caused some companies to pause business during the month, slowing new orders and dipping business activity, the report said.
However, the report noted that employment and purchasing activity continued to rise, and firms grew increasingly optimistic about the year-ahead outlook. Input costs and output prices continued to rise sharply, but a recent improvement in the cedi’s strength helped 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 signalled a slight worsening in private-sector health at the end of 2024, ending a two-month improvement streak.
According to the latest PMI report, the deterioration in overall business conditions reflected, in part, the first three-month reduction in business activity in December.
Although price pressures contributed to the fall, anecdotal evidence suggested the drop in output could be temporary, 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 a stronger cedi against the US dollar helped them secure new orders. This recent strengthening also helped soften inflationary pressures slightly, with purchase costs rising at the slowest pace in nine months.
That said, purchase prices still rose markedly after a 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 staffing levels in December amid improving customer demand. Employment rose for the eleventh consecutive month, albeit at a softer pace.
Meanwhile, backlogs of work fell slightly further. Purchasing activity also rose 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 input stocks accumulated for the third month in a row, albeit modestly. Firms paid for purchased items on time to secure delivery slots.
This, alongside competition among suppliers, meant lead times shortened markedly in December, more than at any point since October 2023.
Companies were increasingly optimistic that business activity would 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
