Private sector gains momentum as business conditions improve
In March 2023, the private sector in Ghana continued to recover from the economic downturn caused by the Covid-19 pandemic, according to the latest S&P Global Ghana Purchasing Managers’ Index™. This marks the second consecutive month of growth in business conditions, with the index rising to 50.9 from 50.2 in February.
The expansion was driven by a solid increase in new orders, as customer demand was helped by further signs of inflationary pressures slowing. This improvement prompted firms to expand staffing levels again and raise purchasing activity for the first time in almost a year. In turn, suppliers’ delivery times shortened to the greatest extent on record, indicating a strong improvement in vendor performance.
One of the key factors supporting business conditions in March was a more stable currency, which helped to alleviate overall input price inflation despite a slight pick-up in the pace at which firms increased their staff costs. Purchase costs increased at the slowest pace since November 2020, which was evident across a number of survey indicators at the end of the first quarter. This softer inflationary environment also enabled companies to raise their own selling prices at the weakest pace in 21 months, although the pace of charge inflation remained marked overall.
The rate of growth in business activity was modest but quickened from that seen in February, with capacity expansions preventing a build-up in backlogs of work despite signs of pressure coming from a solid rise in new orders. Outstanding business decreased only marginally, and to the least extent in the current 15-month sequence of depletion.
Moreover, business confidence improved slightly, with companies remaining strongly optimistic in the 12-month outlook for business activity. Some 71% of respondents predicted a rise in output, which they linked to hopes for improving demand, stable economic conditions and an improvement in the exchange rate.
Andrew Harker, Economics Director at S&P Global Market Intelligence, stated that “the latest S&P Global Ghana PMI data make further welcome reading as the recovery that got underway in February was not only sustained in March but gathered strength. Firms were increasingly able to secure new business as inflationary pressures softened. This meant further good news for the labour market as employment rose at the fastest pace in nine months. We will hopefully see these positive developments continue in the months ahead.”
Overall, the data indicates a positive outlook for the private sector in Ghana, with sustained growth in business conditions, increasing employment, and expanding purchasing activity. The country’s stable economic conditions and a more stable currency are expected to continue to support these positive developments in the coming months.
