The monthly Purchasing Managers Index (PMI) prepared by Standard Bank Mozambique has found that, as in October, private sector companies in Mozambique in November continued to recover from the crisis caused by the spread of the new coronavirus.
The analysis supports its recovery diagnosis with the fact that levels of production and volume of new orders from companies are close to stabilisation, suggesting a decrease in the impact of Covid-19.
The headline PMI rose to its highest level in eight months, at 49.4 (in November), up from 48.1 in October, and closer to the 50.0 neutral threshold.
As a result of this recovery, the Standard Bank analysis reads, firms raised workforce numbers in the month under review at the strongest pace since February, albeit only modestly. Increased workloads, shop openings and marketing efforts were all reported among businesses seeing a rise in employment.
Nevertheless, the lack of purchasing power constrained efforts to expand inventory levels, even as pressures on the production costs continued to fall, confirming the first decrease in since June.
“Businesses were more confident that activity would increase over the coming 12 months in November. The degree of optimism ticked up for the first time in four months, with approximately 37% of respondents giving a positive forecast. Hopes were often linked to new investments and expectations that the COVID-19 pandemic will end. By contrast, only 2% of companies predicted a fall in output by November 2021,” the PMI reads
“Decreases in stocks of inputs were registered for the eighth successive month during November. Where firms cut inventories, this was linked to falling sales and a lack of purchasing power. That said, despite accelerating from October, the rate of depletion was the second-slowest in the aforementioned sequence,” the report reads.
On a more positive note, “there was a further improvement in supplier performance as lead times shortened for the third month in a row”, the document emphasises.
Despite the recovery, the PMI reports that “cost pressures continued to weaken in the latest survey period, led by a fall in supplier input prices. This supported renewed discounting efforts, as average prices charged decreased for the first time in five months”.
Standard Bank Mozambique’s PMI is based on responses to questionnaires sent to the purchasing directors of a panel of about 400 companies in the private sector. The panel is stratified by specific sector and company size in terms of number of employees, based on contributions to gross domestic product. The sectors covered by the survey include agriculture, mining, manufacturing, construction, wholesale, retail and services.