Ghana: PMI climbs back to positive territory in October
November 5, 2018
The Stanbic IBTC Bank Ghana Purchasing Managers’ Index (PMI) rose to 50.2 points in October from 49.2 points in September. As a result, the index moved slightly above the critical 50-point threshold that separates improvement from deterioration in business conditions in Ghana.
The improvement came on the heels of the first deterioration in Ghanaian business conditions in nearly three years in September and was driven by stabilizing new orders. Furthermore, backlogs of work rose for the fourth consecutive month in October against a backdrop of sustained capacity pressures, which in turn led to increased staffing levels. On the other hand, output continued to contract in October, albeit less severely than in September.
Meanwhile, inflationary pressures intensified again in the surveyed month as input prices increased markedly, largely due to currency weakness. As a result, higher input costs were passed onto consumers and led to rising output prices. Lastly, business confidence continued to slip in October, although it remained firmly in positive territory.
Commenting on the report, Andrew Harker, an associate director at IHS Markit, noted:
“In one sense, the stabilisation of the Ghanaian private sector in October is a welcome sign, as it suggests that the economy may be simply going through a soft patch rather than a more prolonged downturn. Demand conditions are clearly less buoyant than earlier in 2018, however. The build-up of inflationary pressures is a cause for concern given the impact strong price rises have had on the economy in previous years.”
Author: Almanas Stanapedis, Economist