Nigeria’s business activity rebounds after sinking to record low

Business activity in Africa’s biggest economy rebounded last month after shrinking in February for the first time in 32 months due to cash shortages in the country caused by the currency redesign policy of the central bank.

The Stanbic IBTC Bank Nigeria Purchasing Managers’ Index rose to 53.8 in April from 42.3 in the prior month, the latest reading released on Tuesday shows.

The PMI, which measures the performance of the private sector, fell to 44.7 in February from 53.5 in the previous month. Readings above 50.0 signal an improvement in business conditions in the previous month, while readings below 50.0 show a deterioration.

The PMI report said both output and new business expanded sharply in April, ending two-month sequences of decline in each case.

“Rebounds in activity were seen across each of the agriculture, manufacturing, services and wholesale and retail sectors. Business sentiment remained subdued in April, despite a slight pick-up from March. In fact, optimism was among the lowest seen since the survey began in January 2014,” it said.

Firms reported renewed expansions in new business and output amid improved access to funds, but companies remained cautious with regard to hiring and employment fell slightly, according to the report.

It said input costs increased at a sharper rate, but further efforts to attract customers led firms to increase their selling prices at the softest pace for three years.

The Head of Equity Research West Africa at Stanbic IBTC Bank, Mr Muyiwa Oni, said the easing of the cash shortage challenge in April saw improvement in both output and consumer demand.

He said: “While the easier access to cash caused business activities to expand across key sectors (agriculture, manufacturing, services and wholesales and retail sectors), firms however maintained caution in increasing staff head count.

“Sure, business sentiment is still relatively weak as recovery in business activities and the access to cash would likely be gradual and continue in the near term.”