Nigeria: PMI declines to 9-month low on challenging macroeconomic conditions
February 3, 2016
In January, the Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) fell from December’s 54.5 to 51.3. The print marked the lowest reading since April 2015. Nevertheless, the indicator continues above the 50-threshold that separates contraction from expansion in business conditions.
January’s moderation reflected easing conditions in output, new orders and employment, reflecting that economic activity started 2016 on a weaker footing. According to an economist at Stanbic IBTC Bank, “The January PMI reading suggests that the recovery in private sector activity experienced towards the end of 2015 may be short-lived as the challenging state of the macro economy appears to be weighing negatively. […] Given the reliance on oil revenues and the further decline in oil prices, the government seems to be finding it more challenging to remain current on salary payments. The challenges related to access to foreign exchange and the subsequent drop in import related trade activity likely weighed negatively on business conditions. Furthermore, the persistent spread between the official Naira exchange rate (199) and the parallel market rate (290) in January, due to dollar supply challenges, may have placed upward price pressure on imported input items which inevitably pushed output costs higher.”