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Stanbic IBTC Bank Nigeria PMI® | Softest rise in selling prices for a year

May data pointed to a pick-up in growth in the Nigerian private sector, with both output and new orders increasing at sharper rates than in April. Rates of expansion remained slower than the respective series averages, however, as high prices continued to limit demand. That said, there were further signs of inflation levelling off, with both purchase costs and selling prices rising at the slowest rates for a year.

The headline figure derived from the survey is the Purchasing Managers’ Index™ (PMI®). Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.

The headline PMI posted 52.1 in May, up from 51.1 in April and the highest since January. The latest reading signalled a modest improvement in business conditions in the Nigerian private sector, but one that was still less pronounced than the historical trend.

New orders increased solidly in May, extending the current sequence of growth to six months. Business activity was also up, and to the largest extent since January. Growth was recorded across all four monitored sectors, with the sharpest rise in manufacturing.

Anecdotal evidence pointed to improving customer demand amid signs of inflationary pressures easing.

Although purchase costs continued to increase rapidly in May, largely due to currency weakness, the rate of inflation eased to a one-year low. This was also the case with regards to selling prices.

Staffing levels were broadly unchanged again, but efforts to help existing workers with higher living costs meant that employee expenses increased at a solid and accelerated pace midway through the second quarter.

The improvement in customer demand seen in May encouraged companies to expand their purchasing activity. This, allied with positive expectations for future workloads, also led to an increase in inventories. Both input buying and stocks of purchases rose more quickly than in April.

Despite efforts to secure additional inputs, still high prices for materials meant that firms sometimes struggled to accumulate the necessary items to complete projects. As a result, backlogs of work increased for the third consecutive month.

Suppliers’ delivery times continued to shorten, with improved vendor performance linked to a range of factors including prompt payments and good arrangements with vendors in a competitive environment. Lead times have shortened in each month since March 2023.

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