Renewed rise in business activity

Key findings

• New orders increase for tenth month running
• Inflationary pressures strengthen, but remain relatively muted
• Sharpest rise in stocks of purchases since May 2018

Companies in Ghana saw output return to growth in November as the expansion of new orders gained momentum. Firm also increased employment and purchasing activity, while

expanding inventories to the greatest degree in five-and-a half years. Meanwhile, rates of inflation quickened from the previous month but remained relatively subdued.

The S&P Global Ghana Purchasing Managers’ Index (PMI®) rose to 51.6 in November from 50.5 in October, signalling a modest monthly improvement in the health of the private

sector, but one that was the most marked in three months. Business conditions have strengthened continuously on a monthly basis since February.

 

A renewed increase in output was signalled midway through the final quarter of the year, following no change in the previous survey period. Business activity has now risen in nine of the past ten months, with the expansion in November linked to higher new orders.

New orders were up modestly, with the rate of growth quickening to a three-month high. There were some reports that firms had been able to restrict the extent of increases in selling prices, thereby helping to maintain improvements in demand.

Selling prices increased in November, and at the fastest pace since April, but the rate of inflation was still much weaker than those seen in 2022 and softer than the series average.

Those panellists that increased their output charges over the month linked this to the passing on of higher input costs.

Faster increases in both purchase prices and staff costs were recorded. The rise in purchase prices was often reflective of weakness of the cedi against the US dollar. Meanwhile, pay rises to help retain staff and the hiring of new workers added to employee expenses.

 

The latest rise in staffing levels extended the current sequence of job creation to 12 months. The increase in November was solid, albeit slightly softer than that seen in October.

Hiring activity in part reflected the need for greater capacity in line with increased inflows of new orders, and this also supported a rise in purchasing activity during the month. Input buying was up solidly, and to the largest extent since August.

Inventories also increased, and to the greatest degree in five-and-a-half years as companies stored inputs in order to meet activity requirements.

These capacity expansions meant that firms were able to keep on top of workloads despite the sustained growth of new orders. Outstanding business decreased, but at a modest pace that was the softest in six months.

Suppliers’ delivery times shortened again as vendors reportedly responded well to requests for faster deliveries That said, the rate of improvement in supplier performance eased for the fourth consecutive month and was the least pronounced since January.

Companies maintained an optimistic outlook in November, with sentiment above the series average. Confidence in part reflected hopes for stability in exchange rates and prices, with advertising plans also set to bear fruit over the coming

Andrew Harker, Economics Director at S&P Global Market Intelligence, said:

“The stagnation of output in October looks to have been just a blip given the positive signals from the November PMI survey for Ghana. Activity returned to growth as

new orders expanded at a faster pace. Firms made efforts to expand capacity in response to better signs on workloads, in particular ramping up inventories to the largest degree in five-and-a-half years.

“Part of the success of firms in securing new orders in November reflected an ability to limit price increases t customers. With rates of input price inflation quickening, however, further pressure will likely pile on firms to pass on more of the cost burden to clients, potentially harming demand in the months ahead

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