Mozambique: Output growth quickens in March, but firms retrench amid liquidity issues, PMI shows

Private sector firms in Mozambique expanded their output levels at a quicker pace during March, driven by continued growth in client sales and reductions in backlogs. At the same time, however, liquidity issues and difficulties sourcing inputs led to a solid decline in purchasing, while the rate of job creation slipped to a ten-month low. Retrenchment efforts helped to stem the rate of input cost inflation during March, as businesses reported the softest rise in expenses for five months.

Selling prices also rose at a more subdued pace. After reaching its weakest level in the best part of a decade in February, business expectations improved slightly but were the second-lowest since late-2020. The headline figure derived from the survey is the Purchasing Managers’ IndexTM (PMI®).

Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration. The headline PMI stayed at 50.2 in March, signalling another marginal upturn in the health of the domestic private sector economy. An uptick in the output sub-component masked parallel decreases in the measures for inventories and employment.

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The survey data indicated a moderate expansion in private sector output in March, which was the strongest recorded in 2026 so far. Mozambican firms responding to the survey highlighted the impact of higher demand, increased product volumes and securing new work. Total order books across the private sector also rose, marking the sixth consecutive month of growth.

The uplift in output enabled businesses to curb their backlogs of work, with a decline observed for the eighth time in nine months. That said, some survey comments indicated that shortages of inputs and cash, including foreign currency, had disrupted clearance efforts. Liquidity issues were a common feature underlying retrenchment efforts at the end of the first quarter.

Purchases of inputs dropped for the first time since last July and at a solid rate. This led to a near-stalling of inventory growth, despite a further improvement in input delivery times. Mozambican companies also reported a much softer increase in staffing capacity, with the latest rise the slowest in the current ten-month sequence of job creation.

Costs related to the purchasing of inputs declined during March, which helped the overall rate of input price inflation to ease to a five-month low. Staff wages increased since February, but modestly. Mozambican firms enacted only small increases in their selling prices in March.

Moreover, the pace of inflation slipped to its weakest since last October. Although businesses gave a positive assessment of future activity prospects, overall expectations were weak by historical standards. That said, sentiment did improve slightly after reaching its lowest level in over nine years in February. Fáusio Mussá, Chief Economist – Mozambique at Standard Bank, commented:

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