Ghana’s private sector activity expanded in February for the first time in three months, driven by renewed growth in output, new orders, and employment, according to the latest S&P Global Ghana Purchasing Managers’ Index™ (PMI®).
The index rose to 50.5, edging above the neutral 50.0 threshold that separates contraction from growth, up from January’s 47.9. While the uptick signals cautious optimism, businesses continue to grapple with sharp inflationary pressures fueled by currency depreciation and rising fuel costs.
The rebound was underpinned by stronger customer demand and improved economic conditions, with firms citing successful marketing efforts and a post-election boost in client confidence. Employment levels saw a solid increase as companies expanded capacity to meet rising orders, marking the first job growth since January. Purchasing activity also accelerated, contributing to a fifth consecutive monthly rise in inventories. Despite these gains, output growth remained modest, reflecting lingering economic headwinds.
“The recent soft patch in Ghana’s private sector came to an end in February,” said Andrew Harker, Economics Director at S&P Global Market Intelligence. “Firms will be hoping to build on these improvements and generate growth momentum in the months ahead.”
However, inflationary pressures persisted, with input costs rising sharply due to currency weakness and higher fuel prices. Purchase prices surged at the fastest pace in four months, while staff costs increased solidly as employers adjusted wages to offset rising living expenses. These pressures forced businesses to raise selling prices at a marked rate, though the pace of inflation eased slightly from January.
Despite these challenges, business optimism for the year ahead remained resilient. Companies pointed to expectations of currency stability, softer inflation, and potential benefits from new government policies as reasons for confidence. Sentiment, though slightly lower than in January, stayed above the long-term survey average.
The PMI data, compiled from a survey of 400 private sector firms across agriculture, manufacturing, construction, and services, also highlighted improved supply chain conditions. Vendor lead times shortened markedly, and backlogs of work declined at the fastest rate in four months, indicating enhanced operational efficiency.
Ghana’s economic outlook remains a balancing act. While the return to growth offers hope, sustained recovery will hinge on curbing inflation and stabilizing the cedi. Analysts warn that without addressing these structural challenges, the private sector’s momentum could falter.
“The key now is whether this rebound can gain traction,” Harker added. “Businesses are optimistic, but much depends on macroeconomic stability and effective policy support.”
The report underscores the fragile nature of Ghana’s economic recovery as it navigates global volatility and domestic pressures. For now, the uptick in February provides a tentative sign that the worst of the recent slowdown may be over.
