What You Need to Know
In March, Mozambique’s private sector saw a slight uptick in output and order books, as indicated by the Purchasing Managers’ Index (PMI) at 50.2. However, firms faced liquidity challenges, leading to a decline in purchasing and job creation. Despite these issues, business expectations improved slightly from February, reflecting cautious optimism in the economy.
Africa-Press – Mozambique. Key findings
Output rises and order books strengthen
Purchases decrease solidly, contributing to softer price pressures
Outlook improves slightly from February
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.
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.
Comment
Fáusio Mussá, Chief Economist – Mozambique at Standard Bank, commented:
“The Standard Bank Mozambique PMI came in at 50.2 (seasonally adjusted) in March, the same as in February, and not much higher than 50 in January. PMI outcomes above the 50pt benchmark mean month-on-month growth in business conditions.
“Relatively low PMIs imply sluggish growth in the private sector economy. The average PMI for Q1:26 was lower than the average PMI for Q4:25, consistent with our forecasts of a deceleration in GDP growth in Q1:26, to 1.7% y/y, from 4.7% y/y in Q4:25.
“Mozambique’s economy has been hit by adverse weather, including floods, destroying crops, infrastructure and depleting disposable incomes in several regions during Q1:26. Further, fiscal and foreign exchange (FX) liquidity pressure is entrenched, slowing down growth. The strong favourable base effects in Q4:25 are now dissipating, underscoring our expectation of softer GDP growth in Q1:26.
“Still, the March PMI signalled an improvement in the business outlook, with the PMI future business expectations sub-index increasing for the first time this year, likely partly due to progress in liquified natural gas (LNG) projects, which may start lifting GDP growth prospects.
“Nevertheless, short-term challenges abound. We foresee GDP growth turning negative in Q2:26 mainly due to the shut-down of Mozal, which accounts for over 2% of GDP. Further, the Iran war implies rising inflation risks. Indeed, the central bank has now ended its policy rate easing cycle, which had begun in January 2024.”
Mozambique’s economy has faced significant challenges in recent years, including adverse weather conditions that have impacted agricultural output and infrastructure. The country has also grappled with liquidity issues, particularly in foreign exchange, which have hindered economic growth. The PMI, a key indicator of private sector health, reflects these ongoing struggles while also highlighting areas of potential improvement, particularly in sectors like liquefied natural gas (LNG). As the economy seeks recovery, the balance between growth and liquidity remains critical.
