Private Sector activity recorded output expansion in August 2024

The Purchasing Managers’ Index (PMI) Survey report released by Stanbic IBTC Bank Nigeria indicated a value of 49.9 for August 2024, reflecting a minor increase from the 49.2 recorded in July 2024.

The PMI serves as an indicator of economic activity and growth within a country. A reading below 50 signifies a contraction in private sector activity relative to the previous month, while a reading above 50 denotes an expansion, and a value of 50 indicates no change. The PMI for August represents a 1.4% rise compared to the July index.

Nevertheless, this slight uptick remains below the critical threshold of 50.0, suggesting that private sector activity is still subdued, although there are signs of gradual improvement, indicating a positive trend in private sector output. This slow growth can be attributed to escalating input and manufacturing costs, prompting companies to increase their selling prices significantly.

Additionally, demand has remained weak due to rising inflationary pressures, which have been intensified by a depreciating currency. A breakdown of the PMI report reveals that the manufacturing, wholesale, and retail sectors experienced increased activity, while the agricultural sector saw a decline. The modest enhancement in economic activity observed in August points to a slight improvement in Nigeria’s business environment.

However, it is imperative for the government to implement monetary policies aimed at mitigating inflationary pressures, stabilizing the Nigerian currency, and enhancing security on farms to revive agricultural productivity. Moreover, providing subsidies for essential raw materials and reducing taxes on critical imports would assist manufacturing firms in sustaining profitability without significantly increasing their selling prices. SOURCE: CSEA AFRICA