According to the latest report from Standards and Poor’s Global, Ghana has experienced a decline in its Purchasing Manager’s Index (PMI), falling to 49.7 from 51.6 in the first half of the year, indicating worsening business conditions.

PMI is a critical economic indicator derived from monthly surveys of private-sector companies. It offers insights into various economic factors, such as GDP, inflation, exports, and employment.

The report highlighted that high inflation was a significant concern among businesses in June 2024, contributing mainly to the downturn observed at the end of the second quarter. Additionally, purchase prices notably increased, reaching a 19-month high and continuing upward for the fifth consecutive month.

The depreciation of the Ghanaian Cedi against the US dollar was cited as a primary factor behind the decline in PMI. Rising employee costs, driven by higher living expenses, further added to companies’ economic challenges.

In response to escalating costs, businesses raised their prices significantly, resulting in the fastest increase in output prices since November 2022. Approximately 34% of surveyed companies reported hiking prices in June 2024.

Despite inflationary pressures dampening demand, new orders remained steady after four months of growth, with some firms noting customer acceptance of price increases and continued order placements.

The report noted a slight decrease in business activity for the first time in four months, influenced by inflationary impacts on purchasing decisions and overall economic activity. However, business confidence showed improvement in June 2024, driven by expectations of better economic conditions shortly.

Future confidence in output depended heavily on stable exchange rates and prices as businesses navigated the complex economic landscape marked by inflation and currency challenges.