Mozambique PMI climbs to three-year high in July

Mozambique’s private sector delivered its strongest performance in three years during July, as robust demand supported a strengthening of output growth and greater purchasing activity. Business expectations reached their highest level since late 2022, although hiring was curbed slightly due to greater spare capacity. Firms demonstrated increased confidence despite an intensification of cost pressures, with the latest data showing the sharpest rise in input prices since May 2022, driven by fuel shortages and supply constraints.

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 Mozambique PMI rose from its neutral level of 50.0 in June to 51.4 in July.

This signalled renewed momentum in the private sector following three months of stagnation, as well as the strongest improvement in business conditions in exactly three years. New business accelerated in July, with the rate of growth reaching its highest in eight months. Companies attributed the upturn to stronger customer demand, better external market conditions, successful inventory arrivals, and improved cash flow positions.

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Output levels responded in kind, expanding at the joint-fastest pace in three years, as firms increased output to boost productivity and fulfil sales commitments. Business sentiment reached its highest level since October 2022, with 59% of firms expecting activity growth over the coming year compared to just 1% anticipating a downturn. This optimism was driven by expansion plans including new branch openings, increased employment intentions, and investments in machinery, stock, and marketing, anecdotal evidence showed.

Despite strong sentiment, employment contracted for the first time since May 2025, albeit fractionally, as firms appeared to have sufficient capacity to manage current workloads. Indeed, backlogs of work fell at the sharpest pace since November 2022. Purchasing activity resumed growth in July after four months of decline, as businesses recalibrated spending amid higher customer sales.

The rise in procurement supported an expansion in input stocks, particularly in the agriculture and services sectors. Supplier delivery times continued to improve at a mild pace during July. Several firms reported that road transport from South Africa had been disrupted due to recent migrant attacks, however.

On prices, the survey data pointed to increasing inflationary pressures at the start of the third quarter. Shortages of fuel and other raw materials, at a time of rising input demand, led to the steepest uptick in overall costs for more than four years. Companies opted to raise their selling prices more aggressively in July, with the mark-up also the sharpest recorded in just over four years.

Fáusio Mussá, Chief Economist – Mozambique at Standard Bankcommented: “The Standard Bank PMI for Mozambique rose to a three-year high of 51.4 (seasonally adjusted) in July, from a neutral 50 in June, after having remained below 50 in both April and May. PMI outcomes above 50 signify improved m/m private sector business conditions.

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