Private Sector Output in Nigeria Expanded Significantly in December 2023

The December 2023 Stanbic IBTC Bank Purchasing Managers Index (PMI) registered a significant increase, reaching 52.7 compared to November’s 48.0. This PMI, which ranges from 0 to 100, serves as an economic gauge, summarizing changes in the working conditions of private companies across various sectors including agriculture, mining, manufacturing, construction, wholesale, retail, and services. A PMI below 50 indicates a contraction in the private sector, while a value above 50 signifies expansion.

With a PMI of 52.7, we observe a positive expansion in output, marking the first expansion in the past three months. This growth can be attributed to heightened output and new orders, supported by a recovering customer demand. Consequently, job creation, backlogs of work, and vendor performance have all experienced an increase. However, the wholesale and retail sectors have faced a decline in investor confidence.

To restore this confidence, it is crucial for the government to establish a favorable investment climate through policy adjustments and transparent communication. Additionally, the government must address infrastructure challenges, such as electricity, in order to sustain the expansion of output. Furthermore, supporting businesses in adopting new technologies and practices that contribute to growth will also be essential.