New order growth quickens to 15-month high

  • Expansions in output and new orders accelerate
  • Selling price inflation at 22-month low
  • Rate of job creation quickens

Data for the opening month of the second quarter signalled a sustained improvement in Ghana’s private sector. Customer demand improved, with easing inflationary pressures helping to stimulate new orders. This fed through to higher business activity. In order to meet increased new orders, firms expanded their employment and purchasing activity.

The S&P Global Ghana Purchasing Managers’ Index (PMI) posted 51.3 in April, up from 50.9 in March and above the 50.0 no-change mark for the third month running. The latest reading signalled a modest improvement in the health of the country’s private sector, and one that was the largest since December 2021.



April saw a solid and accelerated increase in new business, with the rate of growth quickening to a 15-month high. Customer demand reportedly improved, in part due to a more benign inflationary environment.

This was illustrated by the price indices from the latest survey. Companies continued to increase their selling prices, but the rate of inflation eased for the fifth month running following last November’s survey record and was the least pronounced since June 2021.

The trend in output prices reflected that for input costs. Overall input prices increased at the slowest pace in a year- and-a-half, with weaker increases seen with regards to both purchase prices and staff costs.

Where purchase prices increased, firms linked this to currency weakness and higher taxation. That said, there were some reports that greater stability in the cedi had helped to limit the pace of inflation. Meanwhile, wages were often raised to help workers deal with higher living costs.

The sustained increase in new orders fed through to an expansion in business activity at the start of the second quarter. Output rose for the third month running, with the rate of growth ticking higher in April.

Greater output requirements encouraged companies to increase their workforce numbers again. Employment rose for the fifth month running, and at the fastest pace in close to a year.

Purchasing activity was also up, with softer inflation making it easier for companies to buy inputs. In turn, stocks of purchases rose for the third month running.

Increases in employment and purchasing enabled firms to keep on top of workloads despite the sustained rise in new orders. As a result, backlogs of work continued to fall albeit at only a marginal pace.

Meanwhile, suppliers’ delivery times shortened for the twenty-first consecutive month at the start of the second quarter. Although less pronounced than the previous month’s record, the rate of improvement in vendor performance was still marked and the second-largest since the survey began in January 2014. Prompt orders and payments, plus better material availability, were reportedly behind the latest shortening of lead times.

Business confidence also improved in April and was at a three-month high. Hopes that both the currency and inflation would be relatively stable over the coming year supported optimism. Some panellists also predicted that the IMF programme would help business conditions.

Andrew Harker, Economics Director at S&P Global Market Intelligence, said: “Ghana’s private sector showed more positive signals at the start of the second quarter as the economy remained in recovery mode. A sustained softening of inflation has provided scope for firms to secure greater new order volumes and the confidence to commit to raising employment and purchasing activity. Should inflation continue to trend downwards, we will likely see the recovery sustained in the months to come.”