Nigeria: PMI inches down in June
July 1, 2021
Business conditions in Nigeria’s private sector economy continued to improve at the close of the second quarter, albeit at a softer pace from the prior month as the Stanbic IBTC Nigeria Purchasing Managers’ Index (PMI) eased to 53.6 in June from 54.4 in May. That said, the index remained comfortably above the neutral 50-threshold that separates expansion from contraction in operating conditions.
The headline reading reflected sharp but moderating output growth, while purchasing activity and job creation also expanded at softer clips compared to the prior month. Meanwhile, firms’ backlog of work dropped at a strong pace, despite greater international and domestic client demand. Turning to prices, higher raw material costs drove up input costs, which was in part passed on to customers. Lastly, business sentiment was weak by historical standards, but companies expect a rise in output in the year ahead.
Gbolahan Taiwo, economist at Stanbic IBTC Bank, commented:
“The rapid global vaccination drive across most global economies have yielded some fruit but Africa is largely lagging. To that effect, we have seen some economies across the continent institute some level of public health restrictions amid a third wave of the pandemic. Interestingly, daily Covid-19 infection numbers in Nigeria still remain low and hence talks about new public health restrictions have been very muted. However, given the fact that the country’s land and air borders remain largely open, there remains a risk of third wave stemming from imported cases. In that instance, a return to more stringent public health restrictions could tame the continued recovery expected this year.”
Author: Jan Lammersen, Economist