The private‑sector business climate in Nigeria has deteriorated sharply amid a scarcity of naira, according to a monthly report from Stanbic IBTC. The bank noted that the Purchasing Managers Index (PMI) fell to 44.7 in February 2023, down from 53.5 the month before. This decline marks the first contraction in private‑sector conditions in more than two years, ending a 31‑month streak of expansion.
The report attributes the slump to steep reductions in output and new orders, which stem from cash‑shortage challenges across the country during the month. Firms responded by scaling back purchasing activity and employment. Persistent fuel shortages also pushed petrol pump prices higher, adding to price pressures and causing supplier delivery delays.
Input‑price inflation was the lowest since June 2020, yet it remained above the series average. Conversely, output‑price growth rose sharply, although it was the weakest increase in four months. Despite these headwinds, business sentiment reached a five‑month high, buoyed by optimism that economic conditions will improve and by plans for expansion and investment.
Looking ahead, the report forecasts that Nigeria’s composite PMI will reach 54.00 points by the end of the current quarter, based on Trading Economics’ global macro models and analyst expectations. Over the longer term, Stanbic IBTC’s econometric models project the PMI to average around 54.40 points in 2024 and 56.00 points in 2025.
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