Nigeria’s Purchasing Managers’ Index (PMI) report signals a worrying trend for Nigeria’s private sector, as business activity dipped into contraction for the first time in five months.
The PMI for August registered at 50.2, down from 51.7 in July, revealing only marginal improvement over the previous month and marking the lowest in the current five-month sequence of improving business conditions.
One of the most startling aspects of the report is the drastic increase in both input costs and output charges, reaching the highest levels since the survey’s inception nearly a decade ago.
Unsurprisingly, these conditions have acted to diminish demand, as steep price increases make it challenging for firms to secure new orders.
Rates of expansion in new orders and employment were also sluggish. The rate of new business acquisition has been the softest in the current five-month growth sequence.
The employment sector also experienced only a marginal rise. These indicators point to a private sector struggling to cope with the escalating costs and subdued demand.
Midway through the third quarter, business activity indicated that not all sectors are created equal in this downturn.
Meanwhile, the service sector saw no significant change, revealing a mixed impact across sectors.
Companies are not merely grappling with higher costs; they’re also facing delays from suppliers.
Despite these challenges, business sentiment has improved from its record low but remains historically weak.
The report comes amid the government’s struggle to contain inflation and stimulate economic growth.
