Purchasing Managers’ Index (PMI) up modestly in September amidst cost pressures

The Purchasing Managers’ Index (PMI) is an economic indicator that gives insights into the economic health of Nigeria’s manufacturing and services sectors.

As of September 2023, the overall PMI for Nigeria was reported at 51.1 points, above the 50.0 points threshold and 90 basis points (bps) higher than the five-month low of 50.2 reported in August 2023.

Business activities went up modestly in September 2023 which could be predicated on a marginal increase of new orders for the sixth consecutive as some businesses noted an increase in demand.

Several companies have increased salaries to stem the shock from the fuel subsidy removal and the devaluation of the currency which may have slightly improved demand leading to the observed growth in new orders.

However, business activities remained relatively weak in comparison to the prior year.

Despite the growth in the nation’s PMI, the pace of increase was only modest due to weak demand caused by significantly higher purchase costs. Input prices grew at a record rate.

Inflationary pressures caused by the fuel subsidy removal and the devaluation of the exchange rate continue to affect the manufacturing and non-manufacturing sectors.

This is in addition to an increase in global commodity prices. More so, insecurity challenges in certain parts of the country also continue to disrupt supply chains leading to shortages and price increases.

Employment increased marginally for the fifth successive month in September and though businesses increased buying activities, the growth rate slowed to a six-month low.