Nigeria: Business conditions improve at stronger pace in March
April 7, 2021
Operating conditions in Nigeria’s private sector economy improved for the ninth straight month in March and at a quicker pace than in the prior month, with the Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) rising to 52.9 at the close of the first quarter from 52.0 in February. Consequently, the index moved further north of the neutral 50-threshold that separates expansion from contraction in business conditions.
The headline improvement was driven by a sharp and accelerated rise in new orders, continued employment growth and falling backlogs. Turning to sentiment, firms maintained an optimistic view on output in the year ahead, though sings of moderating optimism emerged as confidence dropped to a three-month low. Meanwhile, input price inflation was robust amid material shortages, and firms increased their selling prices at an accelerated pace.
Gbolahan Taiwo, economist at Stanbic IBTC Bank, commented:
“Barring any resurgence in new infections that could lead to a third wave in the country, we believe private sector activity will continue to improve over the coming months. Dollar illiquidity has been a major concern for businesses who rely on importation of raw materials over the past few months and that still remains concerning. In effect, corporates have had to source FX from the more expensive parallel market- which trades at some 15% premium to the IEFX market. This continues to have subsequent effect on input and output prices which remain quite elevated.”
Author: Jan Lammersen, Economist