In a promising start to 2024, the Nigerian private sector witnessed a robust recovery, as indicated by the latest data from the Stanbic IBTC Purchasing Managers’ Index™ (PMI®). The PMI figures for January revealed a notable acceleration in both output and new orders, marking the second consecutive month of improvement, signaling a positive trajectory for the nation’s economic health.
The headline PMI surged to 54.5, surpassing December’s 52.7, and firmly establishing itself above the critical 50.0 threshold that denotes an enhancement in business conditions. This upward trend suggests a solid rebound, with the private sector experiencing its most significant strengthening in over a year.
The momentum in new orders, which initially surfaced in December, gained further traction in January, with reports from panelists indicating heightened demand. The surge in new business was particularly pronounced, reaching levels not seen since April 2022. Business activity also witnessed a consecutive uptick, achieving its fastest pace in 21 months. All sectors covered in the survey exhibited improved output, reflecting a broad-based recovery.
Moreover, companies demonstrated an increased pace in purchasing activities, resulting in higher stocks of inputs. The efficiency in securing inputs was facilitated by quicker deliveries from suppliers, indicative of strong vendor relationships and streamlined logistics. Companies stockpiling purchases hinted at future plans for output expansion, with optimism prevailing among respondents for increased production over the coming months.
Despite the overall positive outlook, challenges in paying staff led to a softer increase in employment, contributing to a rise in backlogs of work for the second month in a row. However, sentiments remained optimistic, with companies expressing confidence in continued growth throughout the year.
Inflation rates, while still elevated, showed signs of moderation. Purchase prices rose at the slowest pace in eight months, although factors such as currency weakness, increased fuel costs, and higher raw material expenses contributed to persistent inflation. The rate of output charge inflation, while remaining elevated, eased to an eight-month low at the beginning of 2024.
The employment landscape faced challenges due to increased staff costs, influenced by higher living expenses, especially in transportation. Despite these challenges, the overall outlook remains positive, with the PMI report underscoring a resilient recovery in the private sector and fostering confidence in sustained economic growth in Nigeria throughout the year.