Nigeria: PMI deteriorates in May
June 3, 2016
In May, the Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) fell from April’s 50.0 to 49.2. As a result of May’s deterioration, the indicator had dipped below the 50-threshold that separates contraction from expansion in business conditions.
May’s decrease reflected a fall in new orders and output. On the upside, employment and purchasing activities improved in the same month. Ongoing scarcity of hard currency continues to hit economic activity and propping up inflation, while attacks in oil facilities by militants is eroding export revenues. In order to put the economy back on track, analysts at Stanbic IBTC Bank suggest that, “authorities must be willing to attract foreign funding in order to finance domestic investments. It appears that policy makers may be more willing to relax currency controls which will be key to a more constructive short term outlook. However, in the medium term, key structural bottlenecks such as the huge electricity supply deficit, a challenged merchandise distribution network as well as a lack of local oil refining capacity need to be solved.”