Nigeria: PMI drops to record low in August
September 5, 2016
In August, the Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) fell from July’s 48.8 to 46.3, the lowest level on record. This dragged the indicator further below the 50-threshold that separates contraction from expansion in business conditions.
August’s decrease reflected a broad-based deterioration: output, new orders, new export orders, employment and purchasing activity all fell. Low demand and currency weakness fueled a deep contraction in output, while uncertainty surrounding the currency was the main reason for a notably deterioration in new export orders. Commenting on the result, IHS Markit analysts added that, “the PMI readings for July and August suggest that the economic contraction experienced in the first half of the year may still have some way to go as the foreign exchange market struggles to clear out the FX backlog overhang. […] The substantial number of survey respondents who reported a downturn in output due to weakening demand and the weakening naira suggests that it could take a while before conditions improve. The slowing pace of increase in the output prices PMI index suggests that inflation may have eased in August.”