Stanbic IBTC Bank Plc industry survey has indicated that the final month of 2021 recorded a robust expansion in Nigeria’s private sector with the Purchasing Managers Index (PMI) improving to a 24-month high.
The bank, in its PMI’s report for December 2021 released on Monday stated: “Quicker uplifts in output and new orders as well as record inventory building were central to the improvement. Despite the surge in new orders, firms added to their headcounts at the softest pace for 11 months but were still able to keep backlogs at bay.”
“At 56.4 in December, up from 55.0 in November, the latest expansion pointed to a robust overall improvement in business conditions. Moreover, the latest quarterly reading was at 55.2, the highest since the final quarter of 2019.”
Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show deterioration.
The report stated that sub-sector data revealed expansions across board, although manufacturers recorded the strongest increase by far. Wholesale & retail, services and agriculture followed, respectively.
Despite robust expansions in output, firms added to their headcounts at only a slight pace. Panel comments suggested that whilst sales had increased, firms were able to keep up with demand leading to a marked reduction in backlogs.
The PMI report added, “historically elevated rates of new order growth led firms to engage in stockpiling strategies during the month. In fact, inventories increased at the quickest rate in eight years of data collection. Buying levels also increased substantially, and at the fourth-most marked rate in the series.
“A key driver of growth was the quickest rise in new orders for over two years. Firms mentioned fruitful marketing efforts and a general improvement in domestic and international demand. Subsequently, firms boosted output for the thirteenth month running and at the quickest rate since August 2020.”
Meanwhile, the report also said that purchase cost inflation accelerated to a fresh high, and for the fourth month running. Output price inflation followed, also quickening to a new survey peak in December.
“As for prices, purchase costs rose at a survey-record rate for the fourth month running. Higher raw material prices, fuel costs and unfavourable exchange rate movements drove the increase. Favourable demand conditions allowed for costs to be passed on to clients at a record rate in December” the report stated.