The Purchasing Managers Index (PMI) of business activity in Mozambique, which serves as a barometer of the economic health of the private sector, fell back into negative territory in March, pointing to a contraction in the country's economic activity. This trend marks the fourth time in five months that the index has dropped below the 50.0 threshold, which distinguishes between expansion and contraction of business activity, according to a survey carried out by Standard Bank.
Despite a brief improvement in February, when the index reached 50.7, indicating growth for the first time in five months, March saw a fall to 49.7. This decline is attributed to a reduction in companies' inventories and shorter delivery times, which were not offset by the expansions in new orders and employment observed in the period.
Although the study recorded "stable levels of business activity in March", the lack of growth in new business led companies to keep their output volumes unchanged, expressing reduced confidence in their expectations for the coming year. However, companies maintained an increase in employment levels and purchasing activity in March, which helped to mitigate the backlog of work accumulated in February.
Another aspect highlighted in the report is the rise in input prices for the second consecutive month, although the rate of inflation remained modest. Selling prices also continued to rise at a slight pace, reflecting contained inflationary pressures.
Fáusio Mussá, chief economist at Standard Bank Mozambique, commented that the March PMI results suggest weak economic activity at the end of the first quarter, with contractions in the manufacturing and trade sectors. However, agriculture and services in general showed growth. Mussá also pointed to the challenges facing the economy, including adverse weather events and delays in the liquefied natural gas projects in Cabo Delgado, which have negatively affected business confidence.
This picture offers a critical view of the challenges Mozambique faces with regard to the dynamics of business activity, underlining the importance of monitoring the evolution of the private sector and the factors that influence its performance.
