The latest Stanbic IBTC Purchasing Managers Index (PMI) for Nigeria has reflected that the organized private sector (OPS) posted improved growth to 52.7 in December 2023, up from 48.0 recorded in the preceding month.
However, despite the improved performance of the private sector, the business outlook of the economy for the new year ebbed to its lowest since 2014.
The December 2023 PMI increase was the highest since June 2023 when the index stood at 53.2, implying a healthy improvement in the private sector space despite current macroeconomic challenges.
According to the report, demand conditions also showed signs of recovery, resulting in a significant upswing in new orders after two consecutive declines in October and November.
Similarly, the report indicated that business activity in the month under review rebounded and recorded remarkable growth.
Despite this positive trend, the PMI’s sector-specific data indicated a continued decline in wholesale and retail activity.
The report also reflected that both input price inflation and selling price inflation rose sharply in December but played little role in the report as a significant increase was recorded in new orders.
A further analysis of the PMI data in the month under review also indicated that positive trends in new orders and business activity prompted companies to hire more staff, extending the ongoing eight-month job creation sequence while Purchasing activity and inventory holdings also expanded.
However, the Stanbic Bank’s PMI report showed that despite these improvements, backlogs of work increased for the third time in the last four months, due to challenges related to material costs, availability, and delays in customer payments.
It further clarified that competitive pressures and demands for quicker deliveries contributed to the tenth consecutive monthly enhancement in vendor performance.
On business outlook for the new year, the report stated that business confidence for the new year dropped for the second consecutive month to a joint lowest since the survey started in 2014.
The report stated: “Despite the return to growth of activity in December, confidence in the year-ahead outlook continued to wane, easing for the second month running to the joint-lowest since the survey began in January 2014.”
