Private sector activity continued to increase in July

Economic conditions in Mozambique continued to improve last July, according to the latest data from the Purchasing Managers' Index™ (PMI) survey, conducted monthly by Standard Bank.

"Following strong growth during the second quarter of the year, firms recorded sustained increases in output and new orders, although this expansion eased in June. Employment and procurement activity figures also continued to grow," reads the survey report.

The main value calculated by the survey states 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 a value of 51.8 in July, the basic index suffered a decline from a recent peak of 52.9 in June. Therefore, the latest figure pointed to further improvement in the state of the private sector, and was the second fastest growth in about two years," reads the survey report.

The rapid increase in new Covid-19 cases according to the survey was reflected in a decrease in the number of customers at some companies. Despite this situation, the source reports that expectations remained strong overall, with 69% of respondents predicting production expansion in the next 12 months.

Standard Bank's PMI also found that procurement activity was also up in July, although the rate of growth was noticeably lower than in the previous month, resulting in a sharper inventory build-up.

"Despite the apparent pandemic-related decrease in supply, suppliers were able to make deliveries more quickly, leading to a significant reduction in average delivery times. Increased staffing requirements at Mozambican companies resulted in increased employee salaries at the beginning of the third quarter," reads the PMI.

The commercial bank's survey also found that in the month under review there was significant growth in the general costs of production equipment, despite a much smaller acceleration in acquisition prices compared to June.

The study also noted the rise in product prices, a fact that was automatically reflected on customers, resulting in a continued increase in production costs in July.

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 GDP. The sectors covered by the survey include agriculture, mining, manufacturing, construction, wholesale trade, retail trade, and services.

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