Output Growth Surges to Highest Level Since October 2020
- Outputs and new orders grow at significantly faster paces.
- Job creation continues for the third consecutive month.
- Indications of inflationary pressures subsiding
In the second quarter of the year, growth surged significantly within Ghana’s private sector.
Output and new orders grew at a faster pace compared to March, with output rising to its highest level in four and a half years. Consequently, businesses hired additional employees and worked on building up their stockpiles. The improvement in business conditions was partly due to decreased inflationary pressures.
The S&P Global Ghana Purchasing Managers' Index™ increased to 52.6 in April from 50.6 in March, indicating a robust enhancement in the condition of the private sector, marking the strongest such improvement since September 2021. This marks three successive months of improved business conditions.
Business activity expanded significantly during April, reaching its quickest pace in four and a half years. Businesses attributed this notable growth in production to an increase in new orders and better overall economic conditions.
A more robust demand scenario contributed to a third successive rise in new orders for the month. This growth maintained a steady pace, marking the quickest expansion since last November.
The expansion in purchase activity reached a peak over the past five months in April, as businesses ramped up their input procurement significantly in response to growing new orders.
This assisted companies in their endeavors to stock up, with inventories increasing slightly during the period. Several participants mentioned that they aimed to restock following a depletion of supplies from previous purchases. Others sought to accumulate additional inventory as preparation for potential future growth in incoming orders over the coming months.
As purchasing activities expanded, businesses also boosted their hiring to cope with an influx of new orders. The number of employees grew for the third consecutive month, though at the most gradual rate within this period.
Despite the more significant increase in new business, companies managed to stay ahead of their workload once again. Workback logs decreased moderately, with a greater reduction compared to what was observed in March.
In April, indications of moderating inflationary pressures continued to emerge. For the second consecutive month, both purchasing prices and employee wages rose at a decelerated rate, marking inflation levels not seen since 14 months ago and four months ago, respectively.
When purchasing costs increased, participants attributed this to the weakening of the currency; however, they noted that the cedi had shown recent signs of strengthening. Additionally, higher staff expenditures were frequently associated with cost-of-living adjustments.
Following the trend in input cost prices, the rate of output price inflation decelerated for the second consecutive month. The most recent rise was the smallest since February 2024.
At the same time, suppliers' delivery times became shorter again, thanks to timely orders resulting in faster shipments. The pace of this enhancement remained largely consistent with what was observed in March.
The expectation that economic circumstances would keep improving, along with stabilization of currency values and pricing, bolstered the belief that production levels would increase within the next year. Although sentiment declined somewhat compared to March, it remained higher than the historical average for the data series.
Andrew Harker, the Economics Director at S&P Global Market Intelligence, remarked, "In April, growth within Ghana's private sector accelerated significantly, indicating substantial momentum as the second quarter commenced."
The crucial factor going forward will be whether this positive trend can continue over the coming months. With inflation easing and businesses maintaining an upbeat perspective, there is reason to believe that this trajectory could very well persist."
Provided by Syndigate Media Inc. ( Syndigate.info ).
