Ghana’s private sector experienced a modest contraction in January 2026 as the S&P Global Purchasing Managers’ Index (PMI) fell to 48.5 from December’s 51.1, marking the first deterioration in business conditions in 12 months amid muted customer demand at the start of the year.
The PMI reading below the 50.0 threshold indicates worsening business conditions, driven primarily by renewed declines in new orders and output following a year of consecutive expansion. Business activity fell at the fastest pace since January 2025, according to data collected between January 12 and 28 from approximately 400 private sector companies.
Despite the contraction, business confidence surged to a six month high, with 84 percent of survey respondents predicting increased activity over the coming 12 months. Optimism centered on expectations that demand conditions would improve provided exchange rates and prices remain broadly stable.
Employment continued rising for the 12th consecutive month as firms maintained hiring plans based on positive outlook expectations, although the January increase represented the joint weakest expansion in the current sequence. The sustained recruitment amid falling new orders led to solid depletion of work backlogs, with outstanding business decreasing at the largest extent since July 2025.
Purchase prices fell for the third straight month in January, declining solidly at the most marked pace since August 2025. The reduction stemmed from cedi appreciation against the United States dollar around the turn of the year, which lowered import costs for businesses. Staff costs continued rising as companies helped workers manage higher living expenses, but the fall in purchase prices outweighed wage increases, resulting in modest overall input price decreases.
Companies reduced output charges for the ninth consecutive month, with the pace of reduction broadly matching levels seen at the end of 2025. The ongoing absence of inflationary pressure in the private sector illustrates conditions enabling the Bank of Ghana (BoG) to reduce interest rates markedly at recent policy meetings.
Purchasing activity declined in January as the recent period of increased input buying left inventories sufficient for current workloads. Stocks of inputs continued accumulating for the 16th consecutive month despite reduced purchasing. Muted demand for inputs and competition among suppliers caused vendor lead times to shorten markedly, representing the largest extent in four months.
Andrew Harker, Economics Director at S&P Global Market Intelligence, characterized the January softness as potentially temporary. He noted that business confidence hitting a six month high alongside continued staff hiring suggests activity improvements in coming months.
The PMI tracks five key indicators with varying weights: new orders at 30 percent, output at 25 percent, employment at 20 percent, supplier delivery times at 15 percent, and stocks of purchases at 10 percent. The index varies between zero and 100, with readings above 50 indicating expansion and below 50 signaling contraction.
Ghana’s macroeconomic fundamentals have strengthened significantly, with inflation reaching 6.3 percent in November 2025, falling within the central bank’s target range after years of elevated price pressures. The cedi has stabilized following prolonged volatility that previously pressured import dependent businesses.
The survey panel is stratified by detailed sector and company workforce size based on contributions to gross domestic product. Data collection for the Ghana PMI began in January 2014, providing over a decade of private sector performance tracking.
