September PMI: Nigeria’s Business Activity Improves

By Modupe Gbadeyanka

Nigeria’s business activity improved in September despite cost pressures limiting demand, according to the latest Purchasing Managers’ Index (PMI) released by Stanbic IBTC Bank Plc.

The lender said in the period under review, the private sector had a reading of 51.1 points compared with the 50.2 points achieved in August 2023.

It was the rise in business activity in the country was influenced by the growth in order, though the rates of expansion in each were only modest.

New orders increased for the sixth month running in September as some firms signalled an improvement in demand. While the rate of expansion quickened from that in August, it remained only modest as market conditions remained weak and customers were deterred by price hikes.

Output returned to growth, meanwhile, following a slight reduction in August. In a similar vein to new orders, however, the pace of increase was only modest amid widespread demand weakness. Three of the four monitored sectors saw output expand, the exception being manufacturing.

Sharp rises in prices were a key factor limiting demand in the private sector at the end of the third quarter. Overall input costs rose at a pace that was only marginally weaker than August’s survey record.

Purchase costs were up substantially, mainly due to exchange rate weakness and higher fuel costs. Meanwhile, efforts by companies to help their staff deal with higher transportation costs meant that wages were raised markedly. The rate of staff cost inflation was only marginally softer than the series record posted in August.

Sharp increases in purchase costs fed through to a further steep rate of selling price inflation, despite the latest rise being the weakest since May.

Employment increased for the fifth successive month in September, albeit only slightly. Firms also expanded their purchasing activity, but the rate of growth eased to the weakest in six months. This was also the case with regard to stocks of purchases.

Suppliers’ delivery times were shortened amid competition among vendors, prompt payments and quiet traffic conditions.

Confidence in the year-ahead outlook for output was unchanged in September, thereby remaining among the weakest on record. Those companies that predicted a rise in activity linked this to plans to take on extra staff to help with business expansions.