Ghana: PMI picks up in April but stays below the 50 mark
The S&P Global Purchasing Managers’ Index (PMI) came in at 48.3 in April, up from March’s 47.2. Consequently, the index moved closer to the 50.0 no-change threshold, signaling a softer deterioration in business conditions compared to the previous month and hinting at a movement towards stability.
The slight PMI increase from April compared to March was due to milder declines in output and new orders. Meanwhile, employment continued to expand, while the country clocked a near-record improvement in delivery times thanks to larger workforces, fewer pandemic restrictions and weak demand for inputs. Conditions remained challenging however, amidst intensifying inflationary pressures for fuel, commodities and transportation and unfavorable exchange rate movements. This led to an increase in input price inflation, which rose to a seven-and-a-half year high. In terms of outlook, business confidence rebounded to the highest for three months as firms reported hopes for new clients and an end to global Covid-19 restrictions.
Shreeya Patel, economist at S&P Global, said:
“At the heart of the latest contraction was weak demand for Ghanaian goods and services. Once again, rampant price hikes forced customers away from placing orders. The war in Ukraine exacerbated issues […]. In order to encourage demand, firms in Ghana may have to resort to discounting, which comes at the cost of profit margins. For now, steep inflationary pressures remain the largest threat to Ghanaian firms.”