The Standard Bank Mozambique PMI rose to 52.7 points in October, its highest level since April 2022, driven by growth in new orders. Stronger demand prompted companies to step up purchases at a record pace, but output increased only slightly and employment fell again, highlighting the limits of the recovery.

Private sector operating conditions improved for the fourth consecutive month, with the Purchasing Managers’ Index (PMI) up 2.5 points from 50.2 in September. According to the Standard Bank Mozambique report, compiled by S&P Global, new orders grew at the fastest pace since June 2021, while input purchases recorded the largest expansion since the survey began in March 2015.

The indicator signals an improvement in business conditions from the previous month, but it does not directly measure output volumes or the economy’s growth rate. The October reading combines stronger demand with signs of fragility: financial constraints, supply difficulties and rising costs continue to limit companies’ response.

PMI Recovers in October to Highest Level Since April 2022

Source: Standard Bank Mozambique/S&P Global. Data for August, September and October 2026. Readings above 50 points indicate an improvement in business conditions from the previous month.

Construction Leads Growth in New Orders

For the first time in more than two years, all five sectors tracked by the survey recorded an increase in new orders at the same time, with construction posting the sharpest expansion.

Around 29% of surveyed companies reported higher orders, while 15% reported a fall. Respondents linked the improvement to winning new customers, launching products and strengthening their commercial presence.

Output returned to growth after contracting in September, but the recovery was slight. Some companies cited insufficient working capital, material shortages and competition as obstacles to expansion.

The gap between the momentum in orders and the more limited response in output is one of the survey’s main signals: demand is improving, but companies still struggle to turn it into additional activity.

Purchases at a Record Pace, Hiring Still Constrained

To meet new orders and rebuild stocks, companies stepped up purchases of raw materials and other inputs. Around 31% increased purchases in October, while 7% reduced them. These percentages represent the share of companies reporting changes, not the change in the volume purchased.

Inventories rose for the fourth consecutive month, at the fastest pace since July 2022. At the same time, supplier delivery times lengthened slightly, amid stronger demand and shortages of certain products.

Higher Orders Drive Company Purchases

Source: Standard Bank Mozambique PMI, October 2026. Percentage of companies recording increases or reductions.

The increase in purchases was not matched by higher employment. Staffing levels fell for the third time in four months, albeit slightly, with some companies citing financial difficulties as a barrier to hiring.

Backlogs of work also rose for the first time in four months. Although slight, the build-up was the fastest since June 2025, signalling greater pressure on companies’ capacity to respond.

Rising Costs Put Pressure on Selling Prices

The recovery in demand was accompanied by higher costs. Purchase prices rose at the fastest pace since mid-2022, while overall input cost inflation reached a three-month high.

Companies cited pressures linked to fuel, transport and imports. Part of these costs was passed on to selling prices, although competition limited adjustments in some markets.

The trend leaves companies facing an additional difficulty: financing the expansion of operations at a time when the resources needed for production are more expensive.

Standard Bank Links Optimism to Gas Projects

Despite these constraints, 77% of companies expect to raise output over the next 12 months and only 1% anticipate a reduction. Confidence eased slightly from September but remained close to the near nine-year high reached that month.

Expectations rest on plans to open new units, invest in equipment and technology, build up stocks and form new partnerships. These are intentions for the coming year, distinct from the activity results already observed.

In the assessment of Standard Bank Mozambique chief economist Fáusio Mussá, progress on liquefied natural gas projects could help sustain demand for goods and services over the next 12 months. He acknowledges that this outlook may contribute to business optimism, but considers that the fall in employment still points to a fragile recovery.

Among the obstacles, he identifies the state’s limited financial room to raise public investment, financing difficulties and imbalances between the supply and demand for foreign currency, which constrain credit and investment outside the extractive industry.

How to Read the PMI

The PMI combines indicators for new orders, output, employment, delivery times and input stocks. Readings above 50 points signal an improvement in business conditions from the previous month; readings below indicate deterioration. The index does not correspond to a GDP growth rate, nor does it allow the conclusion that output volumes have reached a record high.