Nigeria: Deterioration in economic conditions eases in March
April 5, 2016
In March, the Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) rose from February’s 47.9 to 49.6. February’s print had marked the lowest reading since April 2015. Despite Mach’s rise, the indicator remains below the 50-threshold that separates contraction from expansion in business conditions.
March’s improvement reflected softer decreases in output and new businesses. According to an economist at Stanbic IBTC Bank, “the first quarter of 2016 was tough for the private sector, leading to an overall contraction in activity during that period. Indeed, the quarterly average of the PMI, 49.6, is the lowest on record, suggesting that overall economic growth moderated further from the growth recorded in the fourth quarter of 2015. It is possible that a combination of factors, including delays in passing the Federal Government budget, unfulfilled demand for foreign exchange to pay for imported inputs, final consumer and capital goods, all contributed to restraining economic activity in the quarter. As the price index hints, there has also been mounting price pressures in the economy that have been confirmed by official inflation statistics. Nonetheless, the pace of contraction in activity moderated in March, helped by rises in employment and inventories. The finalisation of the budget could boost activity somewhat beginning in April. In any event, new orders, new export orders and the quantity of purchases seem to have turned around, perhaps portending a recovery.”