By Melvin Onwubuke
The Purchasing Managers’ Index of the Stanbic IBTC Bank said The productivity of the private sector of the Nigerian economy dropped markedly from 54.9 in January to 51.0 in February 2024.
This was revealed by headline figure of the Purchasing Managers’ Index of the Stanbic IBTC Bank for the month of February, which said that some companies raised output in response to higher new orders, but severe price pressures acted to limit growth, according to Thisday.
According to the report, activity increased in the agriculture and services sectors, but decreased in manufacturing and wholesale & retail sectors. It attributed the decline to sharp input cost that prevailed in February due to depreciation of the Naira in the foreign exchange market.
The PMI report said, “the rate of overall input cost inflation accelerated sharply in February and was by far the steepest recorded since the survey began in January 2014, comfortably outpacing the previous peak seen in October 2023.
“Around 78 per cent of respondents indicated that their overall cost burdens had risen over the month, with rapid increases seen across all four broad sectors covered.”
The report stated that the pace of increase accelerated rapidly from the previous month as companies responded to higher input costs. Some 63 per cent of panelists reported a rise in selling prices over the month.
The report noted that the rate of growth slowed sharply in February compared to January and was only modest, even though business activity continued to increase.
In his remark, the Head of Equity Research West Africa at Stanbic IBTC Bank, Mr. Muyiwa Oni, said, “Stanbic IBTC Bank headline PMI slowed to its weakest level since December 2023, moderating remarkably to 51.0 in February from 54.5 in January.
“Employment level dropped below the 50.0 no-change mark for the first time in 10 months while the output and new order’s expansion both weakened significantly in the month.
“These weaknesses were in line with the sharp local currency depreciation, increase in fuel prices, and rapidly rising food costs in February, thereby driving overall cost pressures in the month.
“These lingering pressures may push domestic demand low, limiting growth potentials in Q1:24. Furthermore, price pressures remain biased to the upside over H1:24 and tight monetary conditions could constrain business investments.”
He continued “Notably, interest-rate sensitive sectors like the manufacturing, construction, real estate, and trade are likely to see moderation in growth levels relative to the prior year.
“Accordingly, the non-oil sector’s growth is on track to moderate in 2024 compared to 2023. We project the Nigerian economy will grow by 2.9 per cent in 2024.”
According to the report, the underlying demand appears to have continued to improve, but a number of respondents reported that the ability of customers to make commitments to new orders has been limited by sharp price increases.
