Despite the return to growth by the private sector in December, rising from 48.0 recorded in November to 52.7 in December 2023, the latest Stanbic IBTC Purchasing Managers Index (PMI) for Nigeria has revealed the business outlook for 2024 stands at its lowest since 2014.
The increase was the highest since June 2023 when the index stood at 53.2. The rise in PMI denotes a healthy improvement in the private sector space despite current macroeconomic malaise.
According to the report, demand conditions exhibited signs of recovery, resulting in a significant upswing in new orders after two consecutive declines in October and November.
Likewise, business activity rebounded and experienced substantial growth during the month. Despite this positive trend, sector-specific data indicated a continued decline in wholesale and retail activity.
Both input price inflation and selling price inflation rose sharply in December but played little role in the report as a significant increase was recorded in new orders.
Commenting on the report, the head of Equities Market Research at Stanbic IBTC, Muyiwa Oni stated, “The headline PMI returned to expansion territory for the first time in three months in December 2023, posting 52.7 from 48.0 in November… Nevertheless, feedback from respondents continues to show intense inflationary pressure, with purchase costs and selling prices each rising at sharper rates than in November.”
“We expect inflationary pressures to remain elevated in the near term.”
The report further noted that in December, positive trends in new orders and business activity prompted companies to hire additional staff, extending the ongoing eight-month job creation sequence.
Purchasing activity and inventory holdings also expanded.
Despite these improvements, backlogs of work increased for the third time in the last four months, primarily due to challenges related to material costs, availability, and delays in customer payments.
Competitive pressures and demands for quicker deliveries contributed to the tenth consecutive monthly enhancement in vendor performance.
The report states, “Despite the return to growth of activity in December, confidence in the year-ahead outlook continued to wane, easing for the second month running to the joint-lowest since the survey began in January 2014”.
