Nigeria: Contraction in Nigerian private sector softens in December
January 6, 2017
In December, the Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) rose from 47.7 in November to 48.1, a five-month high. Despite the increase, the index remains below the 50-threshold that separates contraction from expansion in business conditions, where it has been since May 2016.
December’s reading reflects a softer contraction in output and new business. Underlying demand deteriorated and business activity dropped for the tenth month running in the surveyed month. New business swung back to contraction in December and Nigerian businesses shed jobs at the fastest rate in the series’ history as backlogs of work dropped. Regarding price development, the depreciation of the exchange rate, rising delivery costs and higher food prices drove input prices and output costs higher in the final month of the year.
Commenting on the latest trends in the Nigerian economy, IHS Markit analyst Ayomide Mejabi stated that, “it is perhaps still too early to ascertain if a turnaround in Nigeria’s economic challenges is imminent as anecdotal evidence still suggests that many of the productive sectors continue to struggle with foreign exchange needed to boost domestic investment and consequently, growth.”