By Modupe Gbadeyanka
Operating conditions in the Nigerian private sector were better in July 2022 as businesses increased their purchasing activity at the strongest rate for five months while stocks increased sharply.
According to the Purchasing Managers’ Index (PMI) of Stanbic IBTC Bank, in the month under consideration, the headline point was 53.2, higher than the 50.9 recorded in June, signalling an improvement in business conditions in Nigeria’s private sector. The latest figure rose from June’s 17-month low but was still muted compared to the historical average.
This improvement was boosted by a return to growth in output and stronger inflows of new orders amid stronger inflows of new work, employment growth eased and marginal elevated costs.
A renewed increase in output supported the latest improvement in business conditions in July. Output rose solidly, albeit, at a rate that was weak by historical standards, the report said.
Agriculture recorded the strongest uplift in output during July, followed closely by manufacturing. Services and wholesale & retail followed, where rates of growth quickened from those seen in June. Stronger client demand was behind the uplift in output with new orders rising sharply across all four sectors in July, the report added.
To support higher output, companies increased their purchasing activity for the twenty-fifth month in a row. Consequently, stocks of purchases rose markedly as firms intensified efforts to build up their inventories. Moreover, the rate of growth was the steepest in seven months.
Vendor performance improved in July, but to the least extent for over two years amid reports of busier road conditions.
Outstanding business fell at the softest rate since August 2020 in July. Sufficient capacity combined with rising costs led firms to raise their headcounts at the slowest pace for seven months.
Turning to prices, overall input price inflation was robust amid a quicker uptick in purchase costs. Staff costs rose only marginally, however. Firms passed on a large part of the burden by lifting their selling prices at the quickest rate in four months.
Finally, firms remained optimistic about output growth in the year ahead amid hopes of acquiring greater investment and expanding business operations.
