PMI Report: Private Sector Productivity Droped to 46.9%, Worst in 19 Months

Dike Onwuamaeze

The productivity of the private sector of the Nigerian economy dropped to 46.9 in October 2024 from 49.8 in September 2024, which represented the most pronounced deterioration in business conditions since March 2023.

This was stated in the October 2024 report of the Purchasing Managers’ Index (PMI) of the Stanbic IBTC Bank, which stated that business activity decreased to the largest extent in 19 months, with only the agriculture sector bucking the wider trend to record a rise in output.

The report also said that the sharp falls in output and new orders dented business confidence in October, with sentiment falling to the lowest on record.

It stated that severe inflationary pressures caused an intensification of the downturn in the Nigerian private sector at the start of the final quarter of the year.

The PMI report said: “The rate of decline in private sector output in Nigeria gathered pace in October, quickening to a marked rate that was the most pronounced since March 2023.  Respondents indicated that challenging economic conditions and high prices had deterred customers, thereby feeding through to reduced activity.  Three of the four monitored sectors saw output fall, the exception being agriculture.”

The report emphasised that, “A recent two-month period of increasing new business came to an abrupt end in October as new orders decreased solidly. In fact, the rate of contraction was the sharpest in just over a year-and-a-half. Panelists reported low customer demand amid rapid inflation.”

According to the report, “overall input costs rose at one of the sharpest rates on record, with selling prices increased accordingly. This resulted in marked reductions in new orders and business activity, while business sentiment was the lowest in the survey’s history. More positively, firms increased their staffing levels marginally despite the drop in workloads.”

Commenting on the report, the Head of Equity Research West Africa at Stanbic IBTC Bank, Mr. Muyiwa Oni, said: “Nigeria’s private sector activity worsened further in October, with the headline PMI settling at a 19-month low of 46.9 points from 49.8 in September.

“The notable reason for this worsening business environment in October was an intensification of already- strong inflationary pressures, reflecting currency weakness and higher prices for fuel and transportation. Consequently, there was a marked reduction in new orders and business activity, while business sentiment was the lowest since the survey began in January 2014.”

Oni added: “The downturn in the business environment worsened at the start of Q4:24, still reflecting the impact of price pressures on consumer demand and business investments.

“Currency pressures and high interest rates are further intensifying the lingering pressure on the private sector. This continues to imply that the non-oil sector’s growth will remain weak, although improved crude oil production relative to the prior year may compensate for this lacklustre non-oil sector’s performance.”

The October data pointed to a renewed fall in purchasing activity, following a first increase in three months during September.

Moreover, the decline was marked and the sharpest since March 2023. Anecdotal evidence suggested that the decline in purchasing was due to a combination of falling customer demand and high prices for inputs.

“The rate of overall input cost inflation quickened for the sixth month running in October and was the fastest since March. In fact, the latest increase was the third-highest on record.  Wholesale and retail posted the steepest rise in overall input costs of the four monitored sectors, while manufacturing was the only one to see the pace of inflation soften from September,” the report said.