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Private sector output in Nigeria grows at survey-record rate

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Staff Writer | May 7, 2018
The Nigerian private sector started the second quarter on a solid footing, with respondents noted a sharp improvement in business conditions during April.
Private sector output in Nigeria
Nigeria   Stanbic IBTC Bank Nigeria PMI
In fact, the latest expansion was the second-strongest since the survey began, following the all-time high registered in March.

Record output growth and marked improvements in new orders and employment all contributed to the latest expansion.

On the price front, input cost inflation sharpened whilst output charge inflation eased, reflecting comments of a budget squeeze from some businesses.

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 58.1 in April, down from 58.8 in March, the latest figure was indicative of a sharp improvement in the health of the private sector.

Moreover, the implied rate of growth was the second-strongest since data collection began in January 2014.

The latest finding extended the current phase of expansion to 16 months.

April data signalled a record pace of output growth in the Nigerian private sector.

According to anecdotal evidence, sustained strong inflows of new business led to higher output requirements.

Output has risen continuously since January 2017.

Reflecting unprecedented output growth, the quantity of purchases increased at a record rate as firms ramped up production in April.

That said, capacity pressures remained solid, signalled by a rise in backlogs of work for the eighth month running.

Incoming new business continued to grow at a sharp rate during April.

Although the rate of growth eased since the record high recorded in March, the latest expansion was the second-strongest in the survey’s near four-and-a-half year history.

Meanwhile, increasing foreign demand was registered for the second month running.

Although job creation softened from the survey high recorded in March, employment growth remained marked overall.

Some firms noted that they hired additional staff to raise operating capacity.

Average cost burdens faced by Nigerian private sector businesses increased at a sharp rate in April.

Moreover, the rate of inflation was the steepest registered since February 2014.

Despite this, companies raised their output charges at only a marginal rate overall, as some respondents noted that they had implemented price discounting to stimulate client demand.