New Telegraph

Report: Nigeria’s PMI eases in August

Nigeria’s Purchasing Managers’ Index (PMI) fell to 52.2 in August from 55.4 in July, the latest Stanbic IBTC Bank Nigeria PMI report shows. According to the report, while business conditions in Nigeria’s private sector improved modestly midway through the third quarter, “the rate of growth slowed to a six-month low.”

 

Specifically, it stated: “At 52.2 in August, down from 55.4 in July, the headline PMI registered a rate of growth that was the softest since February.

 

New orders rose for the fourteenth month in succession during August which panellists linked to greater domestic demand. The rate of expansion eased notably from that seen in the previous survey period, however, with some firms mentioning that higher prices led to weaker sales growth.

 

“Consequently, firms raised their output levels at a softer pace, and one which was subdued in the context of historical data. Those firms increasing output mentioned higher customer numbers. Of the four monitored sub-sectors, two recorded growth.

 

Manufacturers registered the steepest uptick, followed by wholesale & retail  Meanwhile, services saw a marginal decline, while agriculture recorded a sharp contraction.

 

“To cater for higher output levels, firms raised their headcounts marginally during the month. A further increase in staffing levels underpinned a solid reduction in outstanding business. In fact, backlogs fell at the fourth- quickest rate in the series history.”

 

The report further stated: “Quieter road conditions and prompt payments led to shorter delivery times in August. Quicker lead times allowed firms to add to their inventory holdings. Stocks of purchases rose at a sharp and accelerated pace which firms linked to efforts to protect against any future supply shocks. “Turning to prices, higher raw material, commodity, and staff costs as well as unfavourable exchange rate movements led to a marked uptick in input prices. Firms looked to raise selling prices in a bid to protect profit margins. “Finally, sentiment moderated to the third- weakest in the series. Panel comments suggested the longer-term economic implications of COVID-19 weighed on optimism.” The report, however, noted that private sector output at Nigerian firms rose in August for the ninth month running, even though the pace of expansion softened significantly compared with July’s. “Firms reporting an uptick mentioned higher customer numbers, while those seeing a decline linked this to elevated prices and cash shortages. Sub-sector data indicated manufacturers recorded the strongest expansion, followed closely by wholesale & retail. Services and agriculture firms recorded declines in activity, however,” the report said.

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