Nigeria: PMI edges up in September
October 4, 2021
Operating conditions in Nigeria’s private sector improved at a fractionally stronger pace at the close of the third quarter, with the Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) inching up to 52.3 in September from 52.2 in August. Consequently, the index moved further above the neutral 50-threshold that separates expansion from contraction in operating conditions.
The uptick came on the back of stronger growth in new orders, employment and purchasing activity. New orders chiefly increased on the back of healthier domestic demand as exports dropped at the quickest rate since December last year due to lingering Covid-19 restrictions. Greater demand led firms to increase headcounts to keep output up to par. However, output growth moderated for the second month in a row. This came partly on the heels of material shortages; worries over future supply and price shocks drove a notable increase in purchasing activity, with stocks of purchases rising at the fastest rate in just under a year. Turning to prices, higher prices for commodities and a weakening of the naira led to a substantial increase in input prices. This was passed on to customers, with output prices rising at the joint-strongest pace on record. Lastly, sentiment rose to a seven-month high.
Muyiwa Oni, head of equity research West Africa at Stanbic IBTC Bank, commented:
“Increasing reports of vandalism and pipeline sabotage puts downside risk on oil production in the short to medium term. However, the likely increase in investments in the Oil and Gas sector following the signing of PIA into Law could drive production growth over the medium to longer term.”
Author: Jan Lammersen, Economist