Ghana’s private sector experienced sustained growth levels, as new orders saw further improvements in November 2021, according to IHS Markit.
The growth performance reflected an increase in output and employment, with business confidence reaching highest levels in just over a year. That said, inflationary pressures picked up sharply, with higher prices often reflecting increases in fuel costs. Meanwhile, suppliers’ delivery times shortened to the largest extent on record.
The headline seasonally adjusted Purchasing Manager’s Index (PMI) remained unchanged at 51.0, signaling a third successive improvement in business conditions in the private sector, akin to modest pace experienced in October 2021.
In line with this growth trajectory, business activity increased slightly, equal with the pace seen in the previous month. In terms of the rise in output, panelists linked this to higher new orders. Meanwhile, price pressures reportedly limited the pace of expansion.
Commenting on the latest survey results, Andrew Hacker, Economics Director at IHS Markit said:
“Ghana’s private sector continues to grow steadily as the year draws to a close, according to the latest PMI data. One highlight from the latest findings was a sharp jump in confidence as firms look forward to further growth over the year ahead.
“Price pressures continued to build though, in some cases limiting output growth. Higher fuel costs were mentioned in particular as having added to cost burdens.”
Andrew Hacker, IHS Markit
Rise in new orders for the month remained solid. Available data indicated that trends in new business were positive across the five broad areas captured by the survey.
With output increasing, firms raised their staffing levels, thus increasing the rate of job creation. The latest increase was solid and the sharpest since May 2021.
Rising capacity allowed firms to keep on top of workloads despite sustained new order growth. Backlogs of work decreased for the fourth month running, albeit marginally.
Firms Approach 2022 with Optimism
Firms’ confidence in the 12-month outlook for business activity was high, with sentiment rising sharply from October 2021 to the highest over a year. While hopeful of improvements in customer demand, new company strategies and expansion plans supported firms’ optimism. Close to 84% of respondents predicted a rise in activity over the next 12 months, IHS Markit said.
Positive expectations, as well as current demand requirements, supported a rise in inventory holdings for the third time in the past four months. The potential to expand stocks of purchases were supported by increases in input buying and the most marked improvement in vendor performance.
Based on anecdotal evidence, a range of factors were behind quicker deliveries, including competition among suppliers, prompt payments and a positive response to request for shorter lead times.
The rate of purchase cost inflation rose sharply and was at a four-month high in November 2021. Survey panelists often linked higher purchase prices to increased fuel costs. According to the survey results, around 35% of respondents indicated that their purchase costs had risen during the month.
Wages also increased, but at a much softer pace than purchase prices. The incidence of price rise fell mostly on to consumers, as companies often passed on rises in input costs to their customers, thereby leading to a sharp increase in output charges. The rise in inflation was the most marked since July 2021.
Overall, output performance has been encouraging as new orders keep on rising, but prices are likely to remain elevated as have been the case for the past two months. This may reflect rise in demand for goods, and supply constraints due to the impact of the Omicron variant.
