In March, operational conditions in Mozambique strengthened for the second consecutive month, as rising sales fueled additional growth in business activity. Subsequently, companies expanded their procurement activities and increased their inventory levels, according to the latest PMI report.
Nevertheless, the report notes a new decline in employment during March, marking the fastest drop in nearly five years and contributing to a slowdown in overall growth.
Despite being modest, the decline in employment was the sharpest recorded since June 2020.
The PMI recorded 50.2 points in March, down from 50.9 in February, indicating a recovery in the health of the private sector economy for the second consecutive month. Improved business conditions were influenced by increases in production, new orders, and inventories, though they were slightly tempered by lower employment levels and reduced delivery times.
PMI indicators above 50 points suggest an improvement in business conditions compared to the previous month, while indicators below 50 indicate a deterioration.
The PMI (Purchasing Managers Index) is published monthly by Standard Bank and is based on responses from purchasing managers of approximately 400 private sector companies.
From November 2024 to January 2025, a period marked by significant social unrest, demonstrations, and widespread strikes following post-election disputes, the PMI recorded negative values.
The latest survey data indicated that more stable economic conditions boosted sales for Mozambican companies in March. New work volumes increased at the fastest rate since October 2024, although the recovery largely aligned with the long-term trend of the series.
The increase in order books allowed companies to expand their activities for the second consecutive month, with growth registered in the services, wholesale and retail trade, and agriculture sectors, contrasting with declines in construction and secondary sectors.
Expectations for future business activity also improved, with confidence reaching the highest level in seven months. According to panel members, plans to boost activity often involved expanding the customer base, increasing exports, and hiring more personnel, the Standard Bank study highlights.
Fáusio Mussá, the chief economist at Standard Bank, highlighted that while PMI readings above the 50-point benchmark suggest consecutive monthly growth in private sector business activity, it is very likely that GDP growth remained in negative territory in the first quarter of 2025.
We maintain our forecast that growth will turn positive from the second quarter of 2025, implying a slow recovery following the negative impact of the protests that followed the October 2024 elections. It is noteworthy that business sentiment is slowly improving. The PMI sub-index for future business expectations rose in March, though optimism remains below its long-term average. After all, continuous fiscal pressures and foreign exchange liquidity challenges imply a challenging macroeconomic environment, Mussá concludes.
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