Stanbic IBTC Bank Nigeria PMI®


Business conditions continue to improve, albeit at a weaker pace

Key findings

Softer increases in output and new orders Series-record fall in backlogs
Business sentiment hits series low
sa, >50 = improvement since previous month


’14 ’15 ’16 ’17 ’18 ’19 ’20

Data were collected 11-28 September 2020

The Nigerian private sector remained in growth territory in September, although there were some signs of moderation as rates of expansion in output and new orders softened. Companies continued to expand purchasing activity and employment in line with higher new orders.

Suppliers’ delivery times improved further amid a lack of road congestion. Meanwhile, increased workforce numbers and sufficient capacity to fulfil new orders led to a series- record decline in the level of incomplete work. Looking forward, however, business sentiment was the weakest since the start of the survey in January 2014 as some firms reported difficulty planning for the year ahead.

On the price front, overall input price inflation was marked and was driven by increase in raw material costs and unfavourable exchange rates against the US dollar.
The  headline  figure  derived  from  the  survey  is  the
Purchasing Managers’ Index™ (PMI®). Readings above
50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.

At 52.5 in September, the headline seasonally adjusted PMI signalled expansion and one 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.
Output and new orders rose sharply during September.

Sources: Stanbic IBTC Bank, IHS Markit.

In both cases, firms attributed growth to improvements in customer demand following the easing of restrictions related to the coronavirus disease 2019 (COVID-19).
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.

Higher purchase costs was 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.

© 2020 IHS Markit
The Nigeria PMI is endorsed and adopted by NBS.

Stanbic IBTC Bank Nigeria PMI®

Stanbic IBTC Bank
Gbolahan Taiwo Economist, Research T: +234 (1) 422 8290


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