The Ghanaian private sector moved towards stabilisation in May as a loosening of coronavirus disease lockdown measures resulted in much softer reductions in output and new orders than the unprecedented declines recorded in April.
The rate of job cuts remained marked, however, amid reports of spare capacity and the implementation of social distancing rules.
The headline seasonally adjusted Ghana PMI® rose by 15 index points in May, registering 46.7 from the record low of 31.7 posted in April.
Although still signalling a solid deterioration in business conditions, the latest reading pointed to the weakest decline in three months.
Business activity in Ghana's private sector decreased for the third month running in May, although the rate of contraction slowed substantially from that seen in April as some firms restarted operations following a loosening of coronavirus lockdown measures.
A similar trend was seen with regards to new orders.
Where a decline in new business was recorded, panellists reported an ongoing reluctance among customers to spend due to worries around the pandemic.
Continued falls in new orders resulted in spare capacity, with backlogs of work decreasing sharply for the third consecutive month.
Marked job cuts were recorded in May, with the pace of reduction only slightly softer than that seen in April.
Some panellists reported that social distancing rules meant that they had to reduce their staff numbers.
Job cuts and shorter working hours contributed to a further decrease in staff costs.
Companies reduced their purchasing activity again, with some respondents signalling that current inventory holdings were sufficient to support activity.
Stocks of purchases also decreased at a marked, but slower pace.
Suppliers' delivery times lengthened for the third month running.
That said, the rate of deterioration in vendor performance was only modest as an easing of lockdown restrictions and lack of traffic on roads helped some suppliers to speed up deliveries.
Where lead times lengthened, this was generally attributed to material shortages.
Shortages of materials were also a factor behind some companies seeing a rise in purchase costs during May.
On the other hand, lower demand for inputs put downward pressure on supplier prices.
Overall, purchase costs were unchanged from April.
A marginal increase in output prices was signalled, thereby ending a three-month sequence of falling charges.
Where a rise was recorded, panellists linked this to higher costs for some purchases.
The rate of inflation was only marginal, however, amid discounts offered by some companies to attract customers.
Finally, business confidence rebounded and was the highest since November 2018 amid hopes that economic conditions will return to normal once the coronavirus pandemic subsides. ■