Nigeria’s business activity hits 13-month high as inflationary pressures ease
Business activity in Nigeria rose in February to the highest level in 13 months as prices dropped to the lowest in seven months, according to a new Purchasing Managers’ Index (PMI) report.
Since December, the naira-dollar exchange rate has remained relatively stable coupled with reduced petrol prices, easing inflationary pressures in the country.
The latest monthly PMI by Stanbic IBTC Bank released on Monday showed the headline index rose to 53.7 from 52.0 in the previous month. Readings above 50.0 signal an improvement in business conditions, while those below show deterioration. Since December, the index has remained above 50 points.
The growth signals a solid monthly improvement in business conditions, and one that was the most pronounced since January 2024 (54.5).
“February data pointed to improved growth momentum in the Nigerian private sector. Rates of expansion in output, new orders and purchasing activity all quickened as demand picked up and inflationary pressures showed signs of moderating,” the index report said.
It said with costs continuing to rise sharply, some companies were reluctant to hire additional staff and employment increased only marginally.
“Output was up in agriculture, manufacturing, services and wholesale & retail, although in wholesale & retail the rise was only fractional.”
The PMI index, which measures the performance of the private sector, is derived from a survey of 400 companies in the agriculture, manufacturing, services, construction, and retail sectors.
It is a composite index based on five individual indexes with the following weights: new orders (30 percent), output (25 percent), employment (20 percent), suppliers’ delivery times (15 percent), and stock of items purchased (10 percent), with the delivery times index inverted so that it moves in a comparable direction.
“A relatively stable exchange rate and moderation in fuel prices are supporting the ease in inflationary pressures, which in turn helped strengthen consumer demand in the month,” Muyiwa Oni, head of equity research West Africa at Stanbic IBTC Bank, said in the report.
He noted that new orders increased for the fourth consecutive month, with survey participants noting a greater desire on the part of customers to commit to new projects.
“In line with the increase in new orders, output also increased sharply in February as the output index settled at 56.9 points from 53.7 points in January.”
