Report: Economy Deteriorates as Productivity Record 49.6 Points in November
Dike Onwuamaeze
The Nigeria’s business conditions deteriorated further in November as productivity of the private sector of the economy stood at 49.6 in November 2024.
This was revealed in the Stanbic IBTC Bank’s Purchasing Managers’ Index (PMI) report for November 2024, which stated that, “business activity in the Nigerian private sector continued to fall in November as strong inflationary pressures again weighed on customer demand.”
It should be noted that the PMI’s readings above 50.0 signal an improvement in business conditions on the previous month while readings below 50.0 shows deterioration.
The report said: “The headline PMI posted below the 50.0 no-change mark for the fifth consecutive month in November to signal a further deterioration in business conditions in the private sector. That said, at 49.6 the latest reading was up from 46.9 in October and pointed to only a marginal decline.”
It added: “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 increases in output in agriculture and manufacturing, but decreases in wholesale & retail and services.
“Purchase costs rose rapidly again in November amid currency weakness and higher prices for fuel and raw materials. Although slowing slightly for the second month running, the pace of inflation remained elevated.”
In his comment of the latest PMI’s report, the Head of Equity Research West Africa at Stanbic IBTC Bank, Mr. 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.
“Some panelists saw signs of demand picking up, but others reported that high costs again acted to deter customers. Elsewhere, higher energy prices, increases in the cost of raw materials, and lingering currency weakness continue to lead to intensification of price pressures in November.
“Thus, input prices increased at a substantial rate again during November, with the pace of inflation only slightly lower than that seen in October and remaining one of the sharpest on record.
“Indeed, based on the November PMI survey results, companies reported some tentative signs of demand improving although some customers were deterred by high prices.”
The PMI report stated that employment ticked down in November, thereby ending a six-month sequence of job creation as sector data indicated that the overall reduction in employment was centred on services.
The report said, “A combination of low sales volumes and high prices for inputs led Nigerian companies to cut their purchasing activity again during November,” noting that “input buying was down for the fourth time in the past five months. The latest decline was solid and among the largest on record, despite easing from the previous survey period.”
The report said that overall input prices increased at a substantial rate again during November, with the pace of inflation only slightly lower than that seen in October and remaining one of the sharpest on record.
It said: “Manufacturing posted the fastest rise in overall input costs, closely followed by wholesale and retail. The rate of purchase price inflation remained elevated in November as 64 per cent of respondents signaled a rise over the course of the month.”
It said that the weakness of the Naira against the US dollar was a key factor pushing up purchase costs while other factors were higher fuel and raw material prices.
“Higher input costs continued to feed through to rises in output prices during November. Although ticking down from October, the pace of charge inflation remained rapid and was among the fastest in the series history,” the report said.
