By Tunde Osho
A new report released by Stanbic IBTC Bank has shown that private sector business conditions in Nigeria last month improved at an “unparalleled rate.”
In its Purchasing Managers’ Index (PMI) report, the lender said the growth was buoyed by record growth in new orders, employment and stocks of purchases.
It said panel respondents frequently noted an upturn in demand across the domestic market, whilst new export orders also returned to growth in the latest survey.
Price pressures sharpened in March, with both input and output charge inflation registering above their respective long-run averages.
“At 58.8, up from 56.0 in February, the figure accelerated to a record high in March, signalling the fastest improvement in business conditions since the survey began in January 2014. Furthermore, the first quarter of 2018 indicated the strongest quarterly expansion on record,” the Stanbic IBTC Bank Nigeria PMI stated.
The report noted that inflows of new business received by private sector firms were key component of the latest expansion. The rate of growth was unprecedented in March, with many firms reporting a strong upturn in domestic economic conditions. New order books have been improving continuously since the start of 2017. Meanwhile, foreign demand returned to expansion in the latest survey.
In response to record inflows of new orders, firms increased output at a sharp rate. The rate of expansion was strong overall and the third-fastest since the survey’s inception, the report stated.
Reflecting the increase in output requirements, firms hired additional staff at a record pace in March. Job creation has been recorded in every month since May last year. Despite the increase in staff numbers, inflows of new orders outpaced output capacity, as indicated by a solid increase in backlogs of work in the latest survey, it added.
The Stanbic IBTC Bank Nigeria PMI report disclosed that in terms of inflation, average cost burdens increased at a historically elevated pace in March. The rate of input inflation was the fastest recorded for 49 months and was comprised of both rising staff costs and higher raw material prices.
Output charge inflation remained marked in the latest survey, although still well below the highs registered in 2016.
According to anecdotal evidence, some firms increased selling prices to increase profit margins.
Buying activity also increased at a record rate in March. Firms increased input purchasing in anticipation of an expected upturn in demand, alongside the current strong level of new orders. Reflecting input buying growth, stocks of purchases accumulated at an unparalleled rate. Despite increasing demand for inputs, supplier delivery times improved to a record extent.