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Growth remains marked in Nigeria, but softens in December

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Staff Writer | January 8, 2019
The final month of 2018 saw sustained marked expansion in the Nigerian private sector.
Nigeria street
Africa   Output and new orders continued to rise strongly
Output and new orders continued to rise strongly, albeit at weaker rates than seen earlier in the year.

Despite sharp increases in workloads, companies raised employment only modestly amid a near-record increase in staff costs.

Purchase price inflation also gathered pace during December, leading to the fastest rise in output prices in almost two years.

The headline figure derived from the survey is the Purchasing Managers’ Index™ (PMI).

Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.

At 55.0 in December, the PMI signalled a further marked monthly improvement in the health of the Nigerian private sector, and one which extended the current sequence of strengthening business conditions to two years.

That said, down from 55.5 in November, the reading pointed to a more modest improvement than was seen across 2018 as a whole (56.8).

Both output and new orders continued to rise sharply, albeit at weaker rates than were seen earlier in 2018.

In both cases, panellists indicated that growth was driven by improvements in customer demand.

In turn, rising new business led to a further accumulation of backlogs of work.

Despite continued strong growth of workloads, companies increased their staffing levels at a relatively modest pace.

The rate of job creation did quicken, however, and was the fastest in four months.

Relatively muted hiring in December coincided with a solid rise in staff costs, and one that was the secondfastest in the survey’s history behind the record seen in February 2014.

Respondents indicated that wages had been raised in order to motivate workers.

Higher staff costs were part of a more general pick-up in inflationary pressures at the end of 2018.

Purchase price inflation also quickened amid reports of rising raw material costs.

In response to increased cost burdens, companies raised their output prices at a marked pace, and one that was the steepest since January 2017.

Firms responded to strong customer demand by raising their purchasing activity at a sharp and accelerated pace in December.

Prompt orders and payments, alongside competition among suppliers, meant that vendor delivery times shortened to the greatest extent in six months.

Strong rises in purchasing and quicker deliveries from suppliers led to the most marked accumulation of stocks of purchases since May