Nigeria’s business activity expands for first time in 3 months

…hits 6-month high in December

Business activity in Nigeria expanded for the first time in three months in December 2023 despite rising prices, a new Purchasing Managers’ Index (PMI) has shown.

The latest monthly PMI by Stanbic IBTC Bank released on Tuesday showed the headline index rose to 52.7 in December from 48.0 in November. Readings above 50.0 signal an improvement in business conditions, while those below show deterioration.

Further analysis shows that December’s index is the highest in six months.

“The Nigerian private sector returned to growth in December, with renewed increases in both output and new orders recorded amid some signs of recovery in demand,” the index report said.

It said this was despite continued intense inflationary pressure, with purchase costs and selling prices each rising at sharper rates than in November.

“Meanwhile, business confidence dropped to the joint-lowest in the decade-long survey so far. The reading signalled a solid improvement in the health of the private sector, and one that was the most marked since June.”

The PMI index, which measures the performance of the private sector, is derived from a survey of 400 companies from agriculture, manufacturing, services, construction and retail sectors.

It is a composite index based on five individual indexes with the following weights: new orders (30 percent), output (25 percent), employment (20 percent), suppliers’ delivery times (15 percent) and stock of items purchased (10 percent), with the delivery times index inverted so that it moves in a comparable direction.

May’s PMI index (54.0) saw the highest growth since the beginning of 2023.

Authors of the report said the improvements in new orders and business activity in December encouraged companies to take on extra staff at the end of the year, thereby extending the current sequence of job creation to eight months.

“Purchasing activity and inventory holdings were also expanded. Backlogs of work increased for the third time in the past four months, however, amid issues with the cost and availability of materials and customer payment delays.”