Nigeria’s private sector saw its first employment decline in seven months, according to the latest Stanbic IBTC Bank Purchasing Managers’ Index report for November.
The decrease in staffing levels, ending a six-month period of job growth, was mainly observed in the services sector, though the drop was modest.
The decline in employment reflects the ongoing challenges businesses face due to rising costs and weakening demand.
Companies also scaled back on purchasing activity and reduced inventory levels, highlighting a cautious approach in response to inflationary pressures.
The report read, “Employment was also down, thereby ending a six-month sequence of job creation. The pace of reduction was only marginal, however, as the overall fall in staffing levels was limited to just services firms.”
New orders saw a rebound in November, following a sharp decline in October.
However, demand remained weak as high prices continued to discourage customers.
Inflationary pressures, driven by a weakened currency and rising fuel and raw material costs, continued to strain businesses.
The report also pointed to persistent inflationary pressures, subdued business activity, and a decrease in output, despite a slight uptick in new orders.
The headline PMI, which measures business conditions, stood at 49.6 in November, indicating a slight contraction in the economy. While this represented an improvement from October’s reading of 46.9, it marked the fifth consecutive month of negative growth.
A reading below 50.0 indicates a decline in business conditions, while a figure above 50.0 signals growth.
The report noted that input costs continued to rise sharply in November, driven by inflationary pressures from higher energy prices and raw material costs. Staff costs also increased as businesses adjusted wages to help employees manage the rising costs of living and transportation.
In November, Nigeria’s economic sectors showed mixed results. While agriculture and manufacturing experienced modest growth, the wholesale & retail and services sectors continued to decline. Weak demand and rising input costs put pressure on businesses across multiple industries.
On a positive note, supply chain conditions improved slightly, with firms reporting shorter delivery times due to less road congestion, timely payments, and increased competition among suppliers.
However, business confidence for the months ahead hit a record low, as companies expressed concerns over ongoing inflation and economic uncertainty.
Commenting. the Head of Equity Research West Africa at Stanbic IBTC Bank, Muyiwa Oni, noted that while the PMI indicated a deterioration in business conditions, Nigeria’s non-oil GDP grew by 3.46% year-on-year in Q3 2024, up from 3.19% in Q2.
Oni, however, pointed out the disconnect between the PMI and GDP growth, noting that the PMI declined despite strong performance in the non-oil sector.
Looking forward, Oni expects the Nigerian economy to maintain its growth momentum in Q4 2024, bolstered by higher economic activity during the festive season and a recovery in crude oil production.
