According to a Stanbic IBTC Bank Limited Purchasing Managers Index (PMI) report, business conditions in the Nigerian private sector fell to 52.3 points in August.
The headline PMI came in at 52.3 in August from 53.2 in July, signaling further improvement in trading conditions. That said, the growth rate was lower than the long-term series average.
The main figure from the survey is the Purchasing Managers’ Index (PMI). Readings above 50.0 signal an improvement in trading conditions from the previous month, while readings below 50.0 indicate deterioration.
The report notes that private sector business conditions improved slightly in the middle of the third quarter, but the rate of growth slowed from that seen in July.
According to Stanbic IBTC Bank, smaller increases were recorded in production, new orders and purchasing activity, while employment grew at a faster pace. At the same time, headline input price inflation rose at the second fastest rate on record, while sentiment moderated to its weakest level since last November.
“New orders increased for the twenty-sixth consecutive month in August, which panelists linked to general improvements in customer demand. However, the growth rate slowed from July, in a context of high prices.
“The rise in sales supported a second successive increase in production in the Nigerian private sector. The growth rate was broadly in line with that seen in July, but was weaker than the average of the long-term series. Of the four sub-sectors tracked, three recorded production growth. Agriculture tops the ranking, followed respectively by wholesale and retail trade and services. Manufacturers, meanwhile, saw lower production levels during the month of August.
“Despite the slowdown in production and growth in new orders, companies increased their workforces at a faster pace in August. The overall rate of job creation was modest and the highest in three months. Subsequently, companies continued to reduce their arrears, but the rate of decline was minimal due to difficulties in the supply of some key inputs.
He added that advance payments led to faster delivery times from suppliers in August. In fact, supplier performance has improved the most in three months. Shorter lead times allowed companies to increase their inventories. Purchased inventories, however, increased at a slower pace than in July.
“On the price front, increased spending on commodities and transportation has put upward pressure on purchasing costs. At the same time, companies have raised salaries for their staff to motivate their workforce and in view of rising living costs. The headline rate of input price inflation was the second fastest in survey history, surpassed only by that seen in November 2021.
“Looking ahead, companies remained optimistic about production growth over the coming year, as they have since the start of the survey in January 2014, but the degree of positivity has been the weakest for nine months,” he said.