Nigeria: PMI hits nine-month high in May
Business conditions in Nigeria’s private sector economy continued to improve, with Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) coming at a nine-month high of 54.4 in May, up from April’s 52.9. As a result, the index moved further above the neutral 50-threshold that separates expansion from contraction in business conditions.
The uptick in the headline reading came on the heels of the strongest increase in new orders in nine months, and the fastest rise in exports since February last year. As a result, output expanded for the sixth month running and at the strongest pace in the sequence. In a bid to keep up pace with greater output requirements, firms raised their staff levels. Job creation was the strongest in nearly three years. This helped firms to reduce backlogs of work at an accelerated pace. Turning to prices, input price inflation increased at the strongest pace on record amid higher raw material costs and unfavorable exchange rate movements. Output prices were raised in response. Lastly, business sentiment remained optimistic amid plans to expand operations.
Gbolahan Taiwo, economist at Stanbic IBTC Bank, commented:
“The Nigerian private sector business environment continues to show strong signs of improvement in May […]. For one, the easing of stringent public health restrictions since the second quarter of last year continues to pave the way for some level of broad macro-economic recovery this year. That said, the economy still faces some idiosyncratic factors of heightened insecurity situation and seemingly low FX liquidity. […]. Inflation continues to remain high and as the recent PMI series suggests, both input and output prices have been on the rise. This potentially could impact the recovery in aggregate demand and purchasing power of the consumer, in light of sticky wages.”