Ghana: Operating conditions improve for the first time in six months in August
Midway through the third quarter, the economic recovery seems to be taking hold as private-sector business conditions improved: The IHS Markit Ghana Purchasing Managers’ Index (PMI) rose to 51.2 in August from 49.7 in July. Consequently, the headline figure moved above the neutral 50-threshold that separates improving from deteriorating business conditions compared to the prior month.
The improvement in August was driven by further growth in new orders amid improving demand dynamics due to the gradual relaxation of Covid-19 measures. As a result, business activity grew for the first time in six months. Moreover, greater demand led to rising backlogs of work amid increased capacity pressures, hence firms took on more staff for the first time in five months; however, the pace of job creation was soft.
Turning to prices, input costs rose at the quickest rate in nearly two years on the back of material shortages linked to disrupted supply chains and border closures. Higher prices for food and fuel were also a particular driver of price pressures. As a consequence, output prices were raised for the fourth month running. Lastly, business confidence increased to an over three-year high due to optimism regarding improving demand.
Andrew Harker, economics director at IHS Markit, commented: “The Covid-19 pandemic clearly remains a threat to the continuation of this month’s positive trend, but all being well firms will hope to see growth momentum build over the rest of the year.”