The Purchasing Manager Index (PMI) of the Stanbic IBTC Bank Plc for the month of January 2021, has shown a marginal increase in economic activities in the Nigerian private sector.
The PMI, which indicated a softer increase in output and new orders in the private sector, also showed that many firms in the private sector laid of their workers at the beginning of the year and passed increases in cost of production to their customers.
The latest data, which was released by the bank stated that the expansion in the activities of the Nigerian private sector in January thrived on solid rise in new orders to strengthen economic growth.
However, the PMI also indicated that the growth in economic activities was accompanied with substantial increases in input costs and selling prices that contributed to a moderation in expansion of outputs and purchasing activity.
These, it stated, made firms to reduce their workforce in order to cut costs.
Despite these, firms were able to complete existing orders with backlogs reducing for the eighth month running.
“Nevertheless, the degree of positive sentiment improved to the highest since April last year, with hopes of greater demand fueling optimism,” said the PMI report, which stated that “readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.”
It added: “The headline PMI registered at 50.7 in January, down from 51.8 in December 2020, but signaling an improvement in business conditions at the Nigerian private sector. That said, the latest reading indicated the softest rate of expansion since July.
“New order inflows rose solidly in January, despite the pace of growth moderating from that in December. According to firms, new client wins and an improving demand environment led to the uptick. Output rose marginally, which extended the current period of growth to two months. Anecdotal evidence suggested that a rise in demand offset the negative impacts of higher prices.”