Report: Economy Recorded Highest Inflation, Manufacturing Decline in August

Dike Onwuamaeze

Economic activities in the manufacturing sector of the Nigerian economy experienced a fall in output levels in August as the productivity of the Nigerian private sector reduced marginally during the month when compared to the preceding month, a new report has revealed.

The new report by the Stanbic IBTC Bank’s Purchasing Manager Index (PMI) for the month of August 2022, showed that the headline PMI was 52.3 in August, down from 53.2 in July.

This implies that the rate of growth was lower by 0.9 percent during the month under review than the long-run series average.

The report said: “Private sector output of Nigerian firms rose in August for the second month running, although the pace of growth eased (reduced) slightly from July. Firms reported that an uplift in demand supported output growth. However, the rate of expansion was weaker than the long-run series average.

“Sub-sector data indicated agriculture firms recorded the strongest expansion, followed by wholesale and retail, and services. However, manufacturers recorded a decline in activity.”

The report also stated that the inflationary pressure witnessed its highest upsurge in August 2022 when compared to previous records since November 2021.

 It attributed the escalation experienced in the prices of goods and services in Nigeria during the month under review to “unfavourable exchange rate movements and higher commodity prices,” as about 61 per cent of firms recorded a rise in purchase costs while 38 per cent left them unchanged. 

The PMI report said: “On the price front, higher commodity and transportation expenses exerted upward pressures on purchase costs. At the same time, firms raised their staff wages to motivate their workforces and in light of higher living expenses. The overall rate of input price inflation was the second-fastest in the survey’s history, surpassed only by that seen in November 2021.”

The report also said that the “latest data revealed another robust increase in purchase prices faced by Nigerian private sector firms. Moreover, the rate of inflation quickened and reached a five-month high in August. Unfavourable exchange rate movements and higher commodity prices led to the increase.”

According to the PMI report, “private sector firms in Nigeria sought to share higher cost burdens with their clients during August. Output prices have risen in each month since January 2016, with the latest uptick marked and much quicker than the long-run series average.”

However, the report showed that Nigerian private sector firms continued to maintain an optimistic view of output in the year ahead.

It said that firms reported plans to expand their businesses and secure greater investment.

But “the degree of positivity eased to a nine-month low as concerns around the macroeconomic environment weighed slightly on hopes.”

Yet, the August data highlighted back-to-back expansions in exports at private sector firms in Nigeria.

The PMI said that the rate of growth in export activities quickened from that seen in July and was the strongest since February 2022.