Ghana: PMI drops in June amid rising price pressures
The IHS Markit Ghana Purchasing Managers’ Index (PMI) dropped to a five-month low of 51.0 in June from May’s 51.5. Nevertheless, the index remained above the neutral 50-threshold indicating a mild improvement in business conditions in the private sector over the previous month.
April’s slowdown was due to a broad-based deterioration, with new orders and output rising at the softest rate since January amid a sharp increase in prices. Consequently, these conditions led businesses to create jobs at the slowest rate in six months.
On the price front, the growth of output prices quickened at the fastest pace in over two years, echoing a sharp increase of purchasing prices due to higher costs for raw materials linked to supply shortages and higher fuel costs. Finally, firms’ optimism over the outlook in the coming 12-month period tumbled to the lowest in over a year amid concerns over cost pressures.
Regarding the latest results, Andrew Harker, Economics Director at IHS Markit, noted:
“Whilst the latest Ghana PMI seems to paint a positive picture of the performance of the private sector midway through the year, delving into the details suggests some developing headwinds. Sustained price rises have begun to test the strength of customer demand as increases in costs for fuel, materials and transportation are passed on to clients. There are also growing concerns among companies that price rises are going to restrict growth over the year ahead. Firms will therefore be hoping that price pressures start to ease so that the current sequence of growth can be sustained.”