Stanbic IBTC Financial institution Nigeria Buying Managers’ Index (PMI) confirmed that Might 2024 knowledge pointed to a pick-up in development within the Nigerian non-public sector, with each output and new orders growing at sharper charges than in April.
The report mentioned “charges of enlargement remained slower than the respective sequence averages, nonetheless, as excessive costs continued to restrict demand. There have been additional indicators of inflation levelling off, with each buy prices and promoting costs rising on the slowest charges for a yr.”
The headline PMI posted 52.1 in Might, up from 51.1 in April and the best since January. The most recent studying signalled a modest enchancment in enterprise situations within the Nigerian non-public sector, however one which was nonetheless much less pronounced than the historic pattern. Readings above 50.0 sign an enchancment in enterprise situations on the earlier month, whereas readings under 50.0 present a deterioration.
In keeping with the report, new orders elevated solidly in Might, extending the present sequence of development to 6 months. Enterprise exercise was additionally up, and to the most important extent since January. Progress was recorded throughout all 4 monitored sectors, with the sharpest rise in manufacturing.
Head of Fairness Analysis West Africa at Stanbic IBTC Financial institution, Muyiwa Oni mentioned, “the Stanbic IBTC headline PMI elevated to 52.1 factors in Might from 51.1 in April, its highest stage since reaching 54.5 factors in January.
“This suggests that Nigeria’s non-public sector exercise maintained a greater footing in Might at the same time as the speed of enlargement remained slower than the sequence common as excessive costs continued to restrict demand.
“Nonetheless, the acquisition prices and promoting costs elevated at their slowest charges in a yr, thereby supporting a sharper enhance in each output and new orders relative to April.”
He famous that “the Nigerian financial system grew reasonably by 2.98 per cent year-on-year in Q1, 2024 from 3.46 per cent Y-o-Y in This autumn, 2023. From a structural perspective, the providers sector stays the expansion engine of this financial system, contributing 83.2 per cent to the actual GDP development fee, with industries and agriculture contributing 15.5 per cent and 1.3 per cent respectively to the actual GDP development.
“As anticipated, the rate of interest delicate sectors skilled a slowdown in development secure for the Manufacturing sector whose development improved modestly, to 1.49 per cent Y-o-Y, from 1.38 per cent Y-o-Y in This autumn, 2023, albeit nonetheless lagging the three-year common development (2.40 per cent Y-o-Y).
“The April and Might headline PMIs level to a slight enchancment in non-public sector exercise in Q2:24, though nonetheless underwhelming in comparison with Q2, 2023.
We anticipate home demand to stay weak relative to historic common, exacerbated by inflationary pressures which can probably peak in Might. In addition to, rates of interest at unprecedented highs will proceed to have a adverse passthrough impression on the non-oil sector. Nevertheless, due to an anticipated beneficial base-effect induced oil sector’s development, the general financial system is on target to develop by 3.51 per cent Y-o-Y in actual phrases in Q2:24.”