Ghana: Operating conditions improve for second month running in September
October 5, 2020
The end of the third quarter saw a continued improvement in private-sector business conditions: The IHS Markit Ghana Purchasing Managers’ Index (PMI) ticked up from 51.2 in August to 51.4 in September—the highest reading since February. Consequently, the headline figure moved further above the neutral 50-threshold that separates improving from deteriorating business conditions compared to the prior month.
The improvement in September was primarily driven by an increase in new orders, which rose for the fourth month running and at the quickest clip since February, as demand conditions strengthened amid the relaxation of Covid-19 restrictions. In addition, both business activity and employment also grew, though the latter just slightly.
Turning to prices, supply problems led input costs to increase solidly and for the fourth consecutive month, though easing somewhat from August. Consequently, higher cost burdens prompted firms to lift output charges once again. Lastly, although business confidence moderated from August’s three-and-a-half year high, firms remained optimistic on positive expectations regarding new business.
Andrew Harker, economics director at IHS Markit, commented: “"The recovery in Ghana's private sector solidified in September, with further improvements in new orders supporting back-to-back increases in output and employment. These data suggest that a quarterly rise in GDP is likely in the third quarter of 2020, following the COVID-19 related contraction in the second quarter."
Author: Javier Colato, Economist