Nigeria: Private-sector business conditions deteriorate sharply in February
The Purchasing Managers’ Index (PMI)—produced by Stanbic IBTC Bank and S&P Global—came in at 44.7 in February, markedly down from January’s 53.5. As a result, the index dropped below the 50.0 no-change mark, signaling a deterioration in private-sector operating conditions from the previous month. February’s result marked the weakest reading since May 2020 and halted a 31-month streak of improving conditions.
February’s downturn chiefly reflected the ongoing cash shortage in the economy as citizens struggled to swap old, high-denominated bank notes for new, redesigned ones. Consequently, consumers were unable to secure funds to spend, prompting new orders and output to decline at the sharpest paces in the series’ history, which started in January 2014—barring the start of the Covid-19 pandemic. In response to slower business, firms reduced headcounts in February.
Additionally, due to fuel scarcity, suppliers’ delivery times lengthened to the greatest extent in nearly seven years. Fuel shortages also led to higher costs. A weaker naira against the U.S. dollar and higher raw material costs pushed cost inflation up. Output prices rose at a softer pace. Lastly, firms’ sentiment regarding the outlook in the coming year rose to a five-month high.