Economic challenges persist in Nigeria, as businesses grapple with inflation and surging operational costs, forcing many to downsize their workforce.
The latest Purchasing Managers Index (PMI) report by Stanbic IBTC reveals that business activities in the private sector declined for the fifth consecutive month in November, with a headline index of 49.6—slightly better than October’s 46.9 but still below the 50.0 threshold indicating growth.
The report attributes this sustained downturn to weakened consumer demand amid rising costs.
Companies across sectors, particularly wholesale, retail, and services, have been reducing purchasing activities and cutting jobs.
It said that “the less pronounced deterioration in business conditions in part reflected a renewed expansion in new orders, which rose slightly following a solid fall in October. Although there were some tentative signs of demand improving, companies reported that high prices often deterred customers.
“The inflationary environment and muted demand conditions meant that business activity continued to fall, the fifth month running in which that has been the case. The latest reduction was only marginal, however. Sector data pointed to increased output in agriculture and manufacturing but decreases in wholesale and retail and services.
“Purchase costs rose rapidly again in November amid currency weakness and higher fuel and raw materials prices. Although slowing slightly during the second month, the pace of inflation remained elevated. Staff costs were also up as companies helped their workers with higher living and transportation costs.”
Stanbic IBTC’s head of Equity Research, Muyiwa Oni, said: “The Nigerian private sector activities deteriorated further in November, albeit at a less pronounced rate relative to October.
“This less pronounced deterioration was primarily due to the return to growth of new orders in November, 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.
“We expect the economy to maintain the Q3, 2024 growth momentum in Q4, 2024, supported by festive-induced increase in economic activity and sustained improvement in crude oil production.
“Indeed, based on the November PMI survey results, companies reported some tentative signs of demand improving although high prices deterred some customers.
“On balance, we estimate the economy to grow by 3.24 per cent year-on-year in real terms in Q4, 2024 and adjust our 2024 growth estimate upward to 3.2 per cent from previously 3.1.”
