Nigeria’s business activity shrinks for 5th month in blow to jobs
Business activity in Nigeria shrank for the fifth straight month in November as inflation remained elevated, further hampering business operations and hurting job creation, the latest purchasing managers’ index (PMI) report by Stanbic IBTC shows.
The headline PMI stood at 49.6 last month compared to 46.9 in the previous month, signalling a further deterioration in business conditions in the private sector. Readings above 50.0 signal an improvement in business conditions on the previous month, while those below 50.0 show a deterioration.
Employment was down for the first time in seven months as companies continued to lower their purchasing amid steep price pressures, it said.
Sector data pointed to increases in output in agriculture and manufacturing, but decreases in wholesale and retail and services, according to the report, which said purchase costs rose rapidly again in November amid currency weakness and higher prices for fuel and raw materials.
It said business confidence continued to wane in November and hit a fresh record low, adding that some firms remained optimistic in the outlook for output amid business expansion and investment plans.
Muyiwa Oni, head of equity research for West Africa at Stanbic IBTC Bank, said the less pronounced deterioration in business activity in November was primarily due to the return to growth of new orders, after having decreased solidly in October.
“Notably, new orders have now risen in three of the past four months, although the latest expansion was only modest. Some panellists saw signs of demand picking up, but others reported that high costs again acted to deter customers,” he said. “Elsewhere, higher energy prices, increases in the cost of raw materials, and lingering currency weakness continue to lead to intensification of price pressures in November.”
He said input prices increased at a substantial rate again in November, with the pace of inflation only slightly lower than that seen in October and remaining one of the sharpest on record.
