Ghana: PMI edges down to six-month low in May
June 6, 2019
The Stanbic IBTC Bank Ghana Purchasing Managers’ Index (PMI) ticked down from 51.2 points in April to 50.6 in May, the weakest reading since November 2018. As a result, the index remained just above the critical 50-point threshold that separates improvement from deterioration in Ghanaian business conditions where it has been for eight consecutive months.
Business activity continued to lose some traction in May, and was chiefly behind the deterioration. Output rose at the weakest pace in the seven months in the surveyed months as new orders were nearly stagnant amid challenging market conditions. In turn, the rate of job creation slowed again in May. Meanwhile, backlogs of work continued to increase, largely owing to issues with funding and power supply. On the price front, despite easing slightly from the previous month, inflationary pressures remained elevated in May, against the backdrop of a still-weak cedi. In turn, firms passed the burden of higher costs onto consumers through higher output prices. Lastly, business sentiment improved for a second consecutive month and hit a five-month high in May, as expectations of a more stable cedi and contained inflation fed through to an improved outlook on new order growth.
Commenting on the report, Andrew Harker, an associate director at IHS Markit, noted:
“Growth of the Ghanaian private sector took a step back in May, with signs of demand softening. Inflationary pressures continued to moderate, however, which should help to stimulate demand. This was reflected in a more confident outlook for firms, who will be hoping to see stronger inflows of new work as the year progresses.”
Author: Almanas Stanapedis, Economist