The private sector business condition in Nigeria has plummeted amidst the naira scarcity, a monthly report by Stanbic IBTC has shown.
In the report, Stanbic IBTC Bank Nigeria stated that the Purchasing Managers Index sank to 44.7 in February of 2023, from 53.5 in the prior month.
According to the bank, the latest record pointed to the first contraction in private sector business conditions in over two years, ending a 31-month sequence of expansion.
“Steep reductions in output and new orders were observed, attributed to the cash shortage challenges experienced across the country during the month.”
It stated that firms scaled back their purchasing activity and employment.
The report read in part, “Meanwhile, persistent fuel shortages saw petrol pump prices increase, which added to price pressures and led to supplier delivery delays.
“The rate of input inflation was the softest since June 2020, but marked and stronger than the series average. In turn, there was a further sharp rise in output prices, albeit one that was the weakest in four months.
“Lastly, business sentiment was at a five-month high, supported by hopes that economic conditions will improve, alongside business expansion and investment plans.”
Expounding on the forecast, the report highlighted that the composite PMI in Nigeria is “expected to be 54.00 points by the end of this quarter, according to Trading Economics global macro models and analysts expectations.”
In retrospect, the Stanbic IBTC Bank Nigeria PMI is projected to trend around 54.40 points in 2024 and 56.00 points in 2025, according to our econometric models.