Thursday, July 18, 2024

Standard Bank’s PMI index indicates a further drop in business activity in Mozambique in December 2023

It is the second consecutive drop and the weakest position since the beginning of 2023, reveals the monthly report. Business activity in Mozambique fell again in December 2023, according to Standard Bank’s Purchasing Managers Index™ (PMI™). This is the second consecutive drop, resulting in the weakest position since the beginning of 2023, according to the report released by Standard Bank. The PMI index is based on the responses of purchasing managers from a panel of around 400 private sector companies and is considered an important indicator of the country’s economic health.

According to the report, Mozambican companies reduced their production levels in December, with the decrease accelerating slightly but remaining modest overall. Order book volumes also fell into negative territory, and levels of activity and purchases continued to decline, resulting in the biggest reduction in inventories since July.

Standard Bank’s chief economist, Fausio Mussá, commented that “this fall in the index mainly reflects contractions in production, new orders, inventories and the quantity of purchases, which points to moderate aggregate demand”. Mussá noted that companies faced higher acquisition costs in December, but were unable to increase sales prices by the same magnitude due to weak demand.

The PMI index had already fallen in November, for the first time since January, to 49.6, and in December it fell again to 48.8. Figures above 50 show an improvement in business conditions, while figures below show a deterioration.

The Standard Bank report noted that “the decline in activity was largely due to weak sales and the depletion of inventories. Firms noted that customers’ purchasing power had weakened due to rising interest rates, although the rate of decline in new orders was generally only slight.”

The PMI is an important indicator for economic analysts, as it provides an overview of business activity and can indicate future trends in the country’s economy.

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