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New order growth quickens to 14-mth high

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  • Stronger rises in output and new orders
  • Inflationary pressures soften
  • Record improvement in delivery times

The recovery in the private sector continued in March as business conditions strengthened for the second month running. Moreover, growth gained momentum on the back of a solid increase in new orders. Customer demand was helped by further signs of inflationary pressures slowing. The improved picture prompted firms to expand staffing levels again and raise purchasing activity for the first time in almost a year. Meanwhile, suppliers’ delivery times shortened to the greatest extent on record.

The S&P Global Ghana Purchasing Managers’ Index™ (PMI rose to 50.9 in March from 50.2 in February, posting above the 50.0 no-change mark for the second month running
following a 12-month sequence of deterioration. The index signalled a modest improvement in business conditions, but one that was the most marked since the end of 2021.

One of the key factors supporting business conditions in March was a solid expansion in new orders. Customer demand reportedly improved amid a more stable currency
and softer inflation.

A softer inflationary environment was evident across a number of survey indicators at the end of the first quarter. Purchase costs increased at the slowest pace since
November 2020, helping to alleviate overall input price inflation despite a slight pick-up in the pace at which firms increased their staff costs.

In turn, companies raised their own selling prices at the weakest pace in 21 months, although the pace of charge inflation remained marked overall.

With new orders increasing, business activity expanded for the second month running. The rate of growth was modest, but quickened from that seen in February.

Firms also responded to greater workloads by increasing both their staffing levels and purchasing activity in March.

The rise in employment was the fourth in as many months and sharpest since June last year.

Meanwhile, the expansion in purchasing activity was the first in almost a year. Alongside stronger demand, companies also linked input buying to efforts to get ahead of future price rises. Higher purchasing helped to support a second successive rise in inventories.

These expansions in capacity helped to prevent a build-up in backlogs of work despite signs of pressure coming from a solid rise in new orders. Outstanding business decreased only marginally, and to the least extent in the current 15-month sequence of depletion.

There was a strong improvement in vendor performance at the end of the first quarter amid more stable operating conditions and timely ordering. Moreover, the latest
shortening of suppliers’ delivery times was the most pronounced since the survey began in January 2014, surpassing the previous record posted in August 2022.

Business confidence improved slightly, with companies remaining strongly optimistic in the 12-month outlook for business activity. Some 71% of respondents predicted a rise
in output, which they linked to hopes for improving demand, stable economic conditions and an improvement in the exchange rate

Andrew Harker, Economics Director at S&P Global Market Intelligence, said:
“The latest S&P Global Ghana PMI data make further welcome reading as the recovery that got underway in February was not only sustained in March but gathered

Firms were increasingly able to secure new business as inflationary pressures softened. This meant further good news for the labour market as employment
rose at the fastest pace in nine months. We will hopefully see these positive developments continue in the months ahead.”

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