Stanbic IBTC Bank PMI: Inflationary Pressures Weaken Business Activity as Costs Soar
Samuel Mobolaji
Nigerian businesses faced heightened challenges in September as inflationary pressures surged, driving up costs and stifling growth, according to the Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI).
Despite a modest rise in new orders, business activity continued to decline for the third consecutive month.
The PMI reading for September was 49.8, slightly lower than August’s 49.9, indicating a fractional deterioration in business conditions for the third straight month.
Inflation was the key issue, with input costs and selling prices increasing at their sharpest rates in six months.
Currency depreciation, rising fuel costs, and higher logistics and transportation expenses all contributed to this spike. Although some companies made efforts to support workers facing higher living costs, wage inflation eased to its lowest level in 18 months.
In response to these increased costs, nearly 49 per cent of surveyed companies raised their selling prices, which in turn dampened customer demand.
The Stanbic IBTC Bank Nigeria PMI showed that despite the price hikes, new orders grew for the second consecutive month, although the expansion remained modest. This slight improvement in demand was not enough to boost overall output, and business activity fell again, marking the third month of decline.
Output rose in agriculture and manufacturing but decreased in wholesale, retail, and services sectors. Employment grew marginally for the fifth month in a row, but hiring slowed to a three-month low as companies aimed to reduce costs.
According to the PMI report, businesses also took a cautious approach to managing inventory, with stocks of inputs falling for the second consecutive month, the largest decline since May 2020.
“While purchasing activity increased for the first time in three months, this rise was not enough to reverse the inventory reduction.
“Companies remained focused on cutting backlogs of work to avoid the financial burden of holding goods, reflecting an overall cautious business sentiment amidst ongoing inflationary challenges”, it stated.
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