Employment growth slowed down in March, making it the lowest in the first quarter of 2018. Although the the private sector experienced sustained strength, which reflected in overall solid job creation, employment eased at the end of March to a three-month low. This was contained in the April 2018 edition of the Stanbic Bank Purchasing Managers’ Index (PMI).
This notwithstanding, the April Stanbic Bank PMI reports that the Ghanaian private sector began the second quarter of 2018 on a healthy note. According to the report, output expanded at an accelerated pace, while new order receipts continued to grow strongly. Sustained strength in demand contributed to the sharpest rise in outstanding business encouraging firms to hire new staff to manage the increased workload, albeit at a slower rate than that seen in March.
Speaking on the report, Ayomide Mejabi, Economist at Stanbic Bank said: “After rising to a six-month high of 55.2 in March, the Stanbic Bank Ghana PMI eased slightly to 54.5 as growth in employment softened despite continued growth in output. While many businesses received a strong level of new orders, the rate of growth slowed slightly in April as business activity normalized to more sustainable levels”.
Mr. Mejabi continued that: “Interestingly, the output price index showed that the disinflation process already underway in Ghana should continue as food inflation and exchange rate volatility remains benign. We still expect USD/GHS to trade within the forward curve throughout this year, rising gently to a maximum of 4.75 by year end. Our modest depreciation bias comes from a more constructive view of Ghana’s twin deficits. The trade balance should receive a boost from increased cocoa exports. Since the beginning of the year, cocoa prices have risen by over 40% which should underpin the performance of the agriculture sector.”
The report further indicated that the rate of growth in activity accelerated for a third successive time in April and was the fastest since August 2017. “Robust demand conditions exerted pressure on capacities across the Ghanaian private sector, with backlogs of work increasing at the sharpest pace since data collection began in January 2014. In response, firms expanded output to a sharp degree in April. The rate of growth in activity accelerated for a third successive survey period and was the fastest since August 2017”, the report said.
The Stanbic Bank Ghana Purchasing Managers’ Index is based on data compiled from monthly replies to questionnaires sent to purchasing executives in approximately 400 private sector companies, which have been carefully selected to accurately represent the true structure of the Ghanaian economy, including agriculture, construction, industry, services and wholesale & retail. The panel is stratified by GDP and company workforce size. Survey responses reflect the change, if any, in the current month compared to the previous month based on data collected mid-month.