Standard Bank’s Purchasing Managers Index™ (PMI™) reported an increase in business activity in Mozambique in February, marking the first rise in five months and the biggest since July 2023. The report, published on Tuesday, March 5, highlights a number of factors that contributed to this improvement, including expansion in sales, acquisitions and staff hiring.

The increase in business activity is determined by a new period of expansion in various areas, as indicated in the document. For the first time since September last year, business conditions have strengthened, driven by growth in new business volumes. However, this increase in demand also generated pressure on companies’ capacity, reflected by the rise in order backlogs for the first time in a year.

According to the study, the PMI index fell last November for the first time since January 2023, revealing a slowdown in demand and economic activity, persisting in decline until January this year. However, in February, the index rose into positive territory, reaching 50.7.

The report also highlights that Mozambican companies mainly reported a new growth in activity, interrupting sequences of decline of three and two months respectively. This was driven by an increase in the number of clients, greater demand, more acquisitions of means of production and productivity. However, only the construction sector recorded contractions in sales.

On the other hand, employment in Mozambican companies rose in February, after falling for the first time in two years. Fáusio Mussá, chief economist at Standard Bank Mozambique, pointed out that the PMI also indicated an increase in business confidence in February. He attributed this to the prospect of further easing of monetary policy and expectations of a resumption of investment in liquefied natural gas (LNG) projects in Cabo Delgado.

Standard Bank’s PMI index, based on the responses of purchasing managers from around 400 private sector companies, reflects a slight improvement in the health of Mozambique’s private sector economy. Prospects for monetary policy easing and optimism about investments in LNG projects suggest a favorable scenario for economic growth in the country, despite persistent security challenges.