Standard Bank Mozambique optimistic of the current business environment

 Standard Bank Mozambique optimistic of the current business environment

Standard Bank Mozambique optimistic of the current business environment.

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The Mozambique Purchasing Managers’ Index (PMI) signaled a renewed improvement in business conditions in September, after falling back into decline over August, thanks to Sadc security intervention that brought stability in the country.

Standard Bank Mozambique said new orders rose at a modest pace, helping to boost confidence and growth in employment. Input purchases also rose, but output levels decreased for the second month running.

Renewed upticks in both purchase and staff costs meanwhile drove a sharp rise in overall cost burdens, leading to the fastest increase in output charges since June.

“The headline figure derived from the survey is the Purchasing Managers’ Index™ (PMI). Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.

“At 50.4 in September, the headline index was back above the 50.0 neutral mark to signal a slight recovery in overall business conditions in the private sector economy.” Standard Bank Mozambique

This followed a tightening of COVID-19 lockdown measures that led the index to a seven-month low of 47.9 in August.

New orders at Mozambican businesses increased in September, as firms reported an uplift in client demand.

That said, the rate of growth was modest and weaker than those seen in the four months prior to August. Manufacturing was the main drag on the economy, as all other monitored sectors saw a rise in sales in the latest survey.

Higher sales encouraged firms to raise their employment levels at the end of the third quarter, with the rate of job creation accelerating from August.

“Confidence for future activity meanwhile strengthened for the first time in three months, with around 65% of panelists expecting an improvement over the coming year.” Standard Bank Mozambique

Whilst total output decreased for the second month running in September, the rate of decline eased markedly from August and was only marginal. Latest data suggested that output capacity remained higher than demand, as firms were able to reduce their backlogs of work.

Input purchasing meanwhile rose in line with new order growth. However, there were reports of delivery delays and material shortages weighing on supplier performance, as lead times improved at the slowest rate since March.

 As a result, overall inventories of inputs were unchanged from the previous month. Mozambican firms saw renewed increases in both purchase prices and salaries in September. Rising input demand, material shortages and increased hiring were reportedly behind the upsurge.

Notably, overall input costs rose at one of the fastest rates in the past three years. Firms largely passed this through to their customers, as output charges increased to the greatest extent since June.

Mozambique has been suffering from Islamic insurgence which has removed consumer and consumer confidence in the past five decade

Louis Schoeman

Louis is a freelance writer that has been featured on investing.com, entrepreneur.com, marketwatch.com, benzinga, seekingaplha. Louis focusses on helpful news and tips on cfd’s, forex trading and crypto. When he is not writing world class articles, he is an avid trader in crypto.

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