Nigeria: PMI dips in June
July 5, 2017
The Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) fell from a 17-month high of 54.4 in May to 52.9 in June. Despite the fall, the indicator lies comfortably above the 50-point threshold that separates expansion from contraction in business conditions for the sixth month running, after almost a year in contractionary territory.
June’s result was driven by strong growth in new orders and output, albeit at a slightly slower rate than in the prior month. Although the domestic market continued to underpin new order growth, encouragingly new export orders also expanded in June following a contraction last month. In response to solid economic activity, firms stepped up hiring efforts, which likely helped reduced backlogs of work. Input price inflation remained fairly moderate, with a corresponding mild rise in output prices.
However, IHS Markit analyst Ayomide Mejabi offered some words of caution: “Despite the relatively more supportive business environment, economic growth is still expected to only rebound moderately as it is becoming evident that some macro rebalancing is underway in Nigeria. This is mainly the result of policy tightness that the monetary authorities have engineered. Unfortunately, in spite of improvements to FX supply, the combination of contracting credit demand and stunted investment spending will probably limit economic growth in the near term.”
Author: Oliver Reynolds, Economist