Worsening business conditions have caused Ghana to drop in the latest world’s Purchasing Managers’ Index (PMI).

PMI are economic indicators derived from monthly surveys of private sector companies.

The PMI features a headline number, indicating the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilisation, employment, and inventories.

Ghana fell to 49.7 from 51.6 in the first six months of the year. This is according to the latest ranking by rating agency Standards and Poor’s Global.

According to the report, high inflation was a major concern for businesses in June 2024 and was largely responsible for the downturn at the end of the second quarter.

Additionally, the rate of increase in purchase prices reached a 19-month high, rising for the fifth consecutive month.

The decline is attributed mainly to the Cedi’s depreciation against the US dollar.

Employee costs also rose in June 2024 as companies supported their workers amidst higher living expenses.

To counter rising costs, companies significantly raised their own prices. This led to the fastest increase in output prices since November 2022, with 34% of respondents raising their prices.

Inflationary pressures reduced demand in June 2024, with new orders remaining flat after four months of growth. However, some firms noted that customers accepted price hikes and continued placing orders.

S&P Global mentioned that rising prices affected business activity, which slightly decreased for the first time in four months. Inflation also influenced firms’ own purchasing decisions.

On the other hand, business confidence improved in June 2024 due to hopes for better economic conditions in the year ahead.

However, confidence in future output depended on stable exchange rates and prices.