Nigeria: Nigerian PMI points to expansion for second month running
February 3, 2017
In February, the Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) rose from 51.9 in January to 52.2. The indicator lies above the 50-threshold that separates expansion from contraction in business conditions for the second month running after a bout of 11 months in contractionary territory.
February’s print, which marks an over one-year high, reflects an expansion in output underpinned by solid growth in new orders and improving demand conditions. Firms increased purchasing activity to meet increased demand, which contributed to the third consecutive increase in inventories of inputs. Despite increases in output and new orders, private sector firms laid off employees to reduce costs. This in turn resulted in the first accumulation of backlogs of work for the first time in six months. Regarding price developments, input costs rose at the slowest pace since the start of 2016 and the rise in output prices also softened.
Commenting on February’s report and hints of an incipient economic recovery, IHS Markit analyst Ayomide Mejabi stated that, “Although the PMI reading still lies below the long-run trend, consistently improving readings suggest that the economy may indeed be experiencing some re-balancing. […] The faster than anticipated recovery in the economy may not be unrelated to the fact that survey respondents continue reporting an expansion of output, perhaps due to increased supply of FX needed for import activity and domestic investment.”