Business Activities Defy Analysts’ Expectations, Rise Marginally

Business activities in Nigeria improved marginally last month, a reversal from a decline in August 2023, according to a new Purchasing Managers’ Index (PMI) on Tuesday.

Analysts had projected a further decline in September as a result of the rising inflationary pressures occasioned by the removal of petrol subsidy and naira devaluation implemented in the second quarter of the year.

The latest monthly Stanbic IBTC Bank’s PMI data, compiled by S&P Global Market Intelligence, showed the headline index increased to 51.1 in September from 50.2 in the previous month, the lowest point over the past five months.

The headline PMI posted 51.1 in September, up from 50.2 in August but still only just above the 50.0 no-change mark. As such, the index signalled a slight monthly improvement in business conditions.

Readings above 50.0 signal an improvement in business conditions, while those below show deterioration.

“Strong cost pressures meant that firms operating in the Nigerian private sector remained under pressure in September,” the index report said.

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It said although new order growth quickened, helping to support a renewed increase in business activity, rates of expansion in each were only modest.

“Input prices increased at one of the sharpest rates on record, largely due to exchange rate weakness and higher fuel costs,” it added.

The PMI index, which measures the performance of the private sector, is derived from a survey of 400 companies from agriculture, manufacturing, services, construction and retail sectors.

It is a composite index based on five individual indexes with the following weights: new orders (30 per cent), output (25 per cent), employment (20 per cent), suppliers’ delivery times (15 per cent) and stock of items purchased (10 per cent), with the delivery times index inverted so that it moves in a comparable direction.

May’s PMI index (54.0) saw the highest growth since the beginning of the year.