Private business activity improved in September after further declines in August. New orders rose at a moderate pace, impacting on rising confidence and employment growth. Purchases of production equipment also rose, but production levels declined for the second month in a row.

These findings are contained in the Purchasing Managers' Index™ (PMI) survey report, prepared monthly by Standard Bank. Methodologically, the survey determines that values above 50.0 point to an improvement in business conditions in the previous month, while values below 50.0 show a deterioration.

"With the value at 50.4 seen in September, the basic index was once again above the neutral value of 50.0, indicating a slight recovery in overall business conditions in the private sector economy. This was followed by a further tightening of the Covid-19 measures, which gave rise to the value of 47.9 in August, the lowest value in the last seven months," the report reads.

The report further details that, with the exception of manufacturing, all monitored sectors recorded an increase in sales in the latest survey. As a consequence of this, companies increased their employment levels at the end of the third quarter.

"Confidence for future activity came out strengthened for the first time in three months, with some 65% of the panel members predicting improvement over the next year," says the report we have been quoting from.

In addition to the above data, the survey found that in the period under review, production capacity remained higher than demand as companies managed to reduce their order backlogs.

The study also found that the acquisition of means of production also rose along with the growth in new orders. It also states that the overhead costs of the means of production grew at one of the highest rates in the last three years and, as a result, companies passed this on to their customers, as production costs rose to the highest values since June.

Standard Bank Mozambique's PMI is compiled from responses to questionnaires sent to purchasing managers of a panel of about 400 private sector companies. 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 trade, retail trade, and services.