By Adedapo Adesanya
Activities in the Nigerian private sector improved in the month of August as the Purchasing Managers’ Index (PMI) analysed by Stanbic IBTC Plc rose to 54.6 index points from 50.4 index points in July 2020.
The headline figure derived from the survey by the bank showed that readings above 50 signalled an improvement in business conditions on the previous month, while readings below 50 showed a deterioration.
The bank explained in its report that the uptick recorded in the month followed an improvement in demand after the federal government eased restrictions earlier put in place to combat the ravaging COVID-19 pandemic.
It said: “The recovery in the Nigerian private sector gathered momentum in August as demand improved following the easing of restrictions related to the coronavirus disease.
“Output and new orders rebounded, rising sharply from July. Employment was broadly stable, although excess capacity remained as a result of the severe declines in new businesses during the second quarter.”
It explained further that currency weakness led to another record increase in purchase costs, which in turn led to a rise in selling prices to a level that has not been seen since the survey began in January 2014.
As regards business activity, it noted that it rose at a substantial pace that was much stronger than seen in the previous month.
However, despite strong rises in workloads during August, the bank noted that excess capacity remained as a result of the severe declines in new businesses during the second quarter.
Companies were, therefore, able to continue depleting backlogs of work while leaving staffing levels broadly unchanged. This stability of employment brought about a four-month sequence of job cuts to an end.
The Nigeria PMI report, published by Stanbic IBTC Bank Plc, reflects economic indicators gotten from monthly surveys of private sector companies and it is targeted at providing information about current business conditions to various stakeholders.
