According to a Purchasing Managers’ Index (PMI) report released by Stanbic IBTC Bank, business activity in Nigeria expanded in December 2023, despite the challenges posed by rising prices.
The monthly PMI indicated that the headline index increased to 52.7 in December, up from 48.0 in November. Readings above 50.0 signal an improvement in business conditions, while readings below indicate deterioration. December’s index is the highest in the past six months.
The report highlighted that the Nigerian private sector returned to growth in December, with increases in both output and new orders, reflecting signs of recovery in demand. This growth occurred despite persistent inflationary pressure, as both purchase costs and selling prices rose at sharper rates than in November. However, business confidence dropped to the joint-lowest level in the decade-long survey.
The PMI index, derived from a survey of 400 companies across various sectors, measures the performance of the private sector. It is a composite index based on five individual indexes: new orders (30 percent), output (25 percent), employment (20 percent), suppliers’ delivery times (15 percent), and the stock of items purchased (10 percent).
The authors of the report noted that improvements in new orders and business activity in December led to increased employment, extending the ongoing sequence of job creation to eight months. Purchasing activity and inventory holdings also expanded. However, backlogs of work increased for the third time in the past four months, influenced by challenges related to the cost and availability of materials and delays in customer payments.
The report indicates a positive trend in the health of the private sector, marking the most significant improvement since June.