Nigerian private sector activities saw an improvement in the month of July 2022, owing to improved business conditions in the country.
Stanbic IBTC Bank’s latest Purchasing Managers’ Index (PMI) report shows the overall PMI came in at 53.2 in July, down from 50.9 in June, signaling improving trading conditions in the Nigerian private sector. The latest figure rose from June’s 17-month low, but was still muted from the historical average.
The main figure from the survey is the Purchasing Managers’ Index (PMI). Readings above 50.0 signal an improvement in trading conditions from the previous month, while readings below 50.0 indicate deterioration.
The report states: “A return to production growth and stronger new order inflows helped support further improvement in operating conditions in the Nigerian private sector in July.
“In turn, businesses increased buying activity at the fastest pace in five months as inventories rose sharply. Despite a greater influx of new jobs, employment growth has slowed and been marginal amid high costs and subsequent pressure on profits.
“Purchaser and producer price inflation accelerated to four-month highs in July, with unfavorable exchange rate movements and higher fuel costs behind the latest round of inflation.”
He pointed out that “however, sentiment improved from June and companies reported hope for more business investment.
The further increase in production supported the latest improvement in economic conditions in July. Production grew solidly, although at a slow pace by historical standards.
“Agriculture recorded the largest increase in output in July, followed closely by manufacturing. Services and wholesale and retail trade followed, where growth rates accelerated relative to those seen in June Firming customer demand drove the rise in production, with new orders surging in all four sectors in July.
“To support higher production, companies increased purchasing activity for the 25th month in a row.
As a result, purchase inventories rose sharply as companies stepped up efforts to replenish inventories. Moreover, the growth rate was the highest in seven months. Supplier performance improved in July, but to a lesser extent for more than two years amid reports of busier road conditions.
“Business backlog fell at the weakest pace since August 2020 in July. Sufficient capacity combined with rising costs led businesses to increase headcount at the slowest pace in seven months.
He noted that headline input price inflation was robust amid faster rising procurement costs. Personnel costs, however, increased only slightly. Firms passed on much of the burden by raising selling prices at the fastest pace in four months, saying companies remained optimistic about output growth in the coming year in hopes of to acquire more investment and expand their business activities.
Speaking on the report, Head of Equity Research for West Africa at Stanbic IBTC Bank, Muyiwa Oni said: “The PMI stock signaled an improvement in the business environment of the private sector, due to high production levels driven by improved demand over the period. ”