Ghana: PMI moderates in January
The Stanbic IBTC Bank Ghana Purchasing Managers’ Index (PMI) deteriorated slightly in January, dropping to 52.6 points at the beginning of the year, down from December’s 53.5 points. Whereas the January reading marked two consecutive years in which the index has remained above the 50-point threshold separating improvement from deterioration in business conditions, the print was the lowest since September 2016. Although the monthly survey of business conditions in the Ghanaian private sector has been conducted since January 2014, the findings were only publicly released from September 2017.
Strong growth in new orders and a tightening labor market were the major drivers behind an overall improvement in Ghanaian business conditions in January, whereas decelerating output growth was the key factor behind the drop in the PMI compared to the previous month. As new order growth accelerated notably in January, firms reported an increase in the backlogs of work, whereas the rate of job creation remained robust, with growing output requirements driving additional private sector hiring. Output prices continued to rise, albeit at the slowest rate in four months, as firms faced increased cost burdens. Higher fuel prices and staff costs, along with supply shortages that drove up the costs of raw materials, were major factors leading to higher input costs in January.
Commenting on the economy’s prospects for next year, Ayomide Mejabi, Economist at Stanbic Bank, said:
“After improving at a really strong pace for most of 2017, the Ghanaian private sector’s growth slowed moderately in January. However, at 52.6 the headline PMI still indicates that business conditions remain healthy in Ghana. It is our expectation that the economy should continue benefitting from expansion in oil production as well as a more favorable credit environment.”