Firms Record Frail Growth On Ease Of Lockdown
The Nigerian private sector recorded steep growth as indicated by the Purchasing Managers’ Index that inched to 52.5 percent in September, amidst softening of rates of expansion in output and new orders.
Over the month, companies continued to expand purchasing activity and employment in line with higher new orders as suppliers’ delivery times improved further amid lack of road congestion.
This is coming as firms attribute growth to improvements in customer demand following the easing of restrictions related to the coronavirus disease 2019 (COVID-19).
According to the data collated between 11-28 September by StanbicIBTC, PMI was 52.5 in September, signalling expansion which extended the current sequence of strengthening business conditions to three months.
That said, down from 54.6 in August, the reading pointed to a more moderate improvement as output and new orders rose sharply during September.
From the survey, the Purchasing Managers’ Index™ (PMI®), 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration. On the price front, overall input price inflation was marked and driven by an increase in raw material costs and unfavourable exchange rates against the US dollar.
Meanwhile, increased workforce numbers and sufficient capacity to fulfil new orders led to a series- record decline in the level of incomplete work. However, higher workloads prompted firms to increase staffing levels which led to the fastest pace of job creation since February. The rise in workforce numbers paired with sufficient capacity led to a series-record depletion in the amount of outstanding business.
Meanwhile, higher purchase costs were the main factor behind strong overall inflationary pressures. Purchase price inflation was substantial following reports of unfavourable exchange rate movements.
“Firms responded to improving customer demand by raising purchasing activity at a sharp pace. Respondents also reported solid growth in stocks of purchases which was linked to planned increases in output levels. Prompt orders and quiet road conditions meant that input delivery times shortened to the greatest extent in almost two-and-a-half years.”
“Looking ahead, business confidence remained positive overall as firms continue to foresee a rise in output over the year ahead. That said, sentiment dropped to the lowest in the series so far amid reports that some firms were not planning to expand output at present.”, the report said.
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