Ghana: PMI drops substantially in June but remains in positive territory
The Stanbic IBTC Bank Ghana Purchasing Managers’ Index (PMI) dropped to 52.7 points in June from 55.8 points in May, marking the lowest reading in five months. Nevertheless, the index remained above the 50-point threshold that separates improvement from deterioration in private sector business conditions.
The weakening in the PMI was driven by slower output growth, which fell from a survey-high in May to a five-month low in June. Output eased in the face of moderating new orders growth, which fell to a year-to-date low in June, amid signs of inflation picking up pace again after several months of moderation. Higher oil prices and the cedi’s depreciation against the U.S. dollar in recent months buoyed inflationary pressures in June, which led to higher input costs that were passed on to consumers. Following the trend, purchasing activity decelerated in June against the backdrop of rising inflationary pressures and input costs. Meanwhile, businesses continued to expand new hiring in June, allowing them to clear some backlogs of work; outstanding business declined by the greatest extent since October 2017.
Commenting on the report, Phumelele Mbiyo, Head of Africa Research at Stanbic Bank, noted:
“The PMI is broadly consistent with macroeconomic data that shows the economy growing strongly. The hint of pricing pressures
indicated by the survey results might be confirmed by a deceleration in the pace of decline in actual consumer price inflation.”