In April 2024, Nigeria witnessed a notable surge in business activity, marking its highest point in three months, propelled by the commendable strengthening of its currency, as revealed by a recent Purchasing Managers’ Index (PMI) analysis.
Released by Stanbic IBTC Bank, the latest PMI report unveiled a modest yet significant uptick, with the headline index climbing to 51.1 last month from 51.0 in March. In the PMI realm, readings surpassing 50.0 indicate an enhancement in business conditions, while those trailing below signify a decline.
The report elucidated, “The headline PMI points to a fifth consecutive monthly improvement in business conditions in the Nigerian private sector, but one that was only slight overall. Conditions for firms continued to be heavily influenced by movements in the naira and the subsequent impact on prices.”
Attributed to the currency’s resurgence in the preceding month, there emerged conspicuous decelerations in the escalation rates of purchase prices and output charges, albeit inflationary pressures persisted significantly.
Further insights from the report unveiled that the latest escalation in selling prices marked the most subdued in nearly a year, with decelerated price increments spanning across all sectors scrutinized in the survey.
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Despite the milder surge in prices compared to March, the report underscored that the persistent inflationary strains continued to impede the pace of output and new orders growth in April, both sustaining a status quo from the prior month.
The PMI index, a barometer of private sector performance, draws insights from a survey encompassing 400 companies spanning agriculture, manufacturing, services, construction, and retail sectors. Comprising a composite index derived from five individual indexes with varying weights, the PMI encapsulates new orders, output, employment, suppliers’ delivery times, and stock of items purchased.
Highlighting sectoral performance, agriculture and manufacturing witnessed substantial output upticks, accompanied by a notable rise in wholesale & retail activities. Conversely, services sector activities witnessed a downturn during the period under review.
“Inflationary pressures softened in the Nigerian private sector during April, following record increases in purchase costs and selling prices in March. Rates of inflation remained elevated, however, and limited growth of output and new orders as well as leading some firms to reduce employment,” the report concluded.
