Nigeria: PMI reaches 17-month high in May
June 5, 2017
The Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) rose from 53.6 in April to 54.4 in May, the highest reading in 17 months and a further sign that the Nigerian economy is slowly turning a corner after falling into recession last year. The indicator lies comfortably above the 50-point threshold that separates expansion from contraction in business conditions for the fifth month running after almost a year in contractionary territory.
May’s result was driven by strong growth in new orders and output, with the latter expanding at the fastest rate in almost two years. The domestic market powered new order growth, while new export orders declined in May. In response to solid economic activity, firms stepped up hiring efforts and purchasing activity. Another encouraging sign came from input price inflation, which moderated further in May on the back of lower staff costs, tempering output price inflation.
However, IHS Markit analyst Ayomide Mejabi offered some words of caution: “Surveyed companies continue to suggest that inventory levels remain buoyant. This may be symptomatic of a fragile private and consumption base as disposable income remains depressed. In addition, the tight stance taken by monetary authorities continues to stifle credit growth and may be impeding a faster economic recovery.”
Author: Oliver Reynolds, Economist