FREE

NIGERIA AUGUST PMI - Further decline recorded in August

The CBN Purchasing Managers’ Index (PMI) pointed to a further decline in business sentiment in August. Manufacturing PMI fell to 42.1 in August (July: 44.1), although the non-manufacturing PMI rose marginally to 43.7 (July: 43.2), with both still below the 50 threshold that signals no change in the level of business activity from the previous month.

The sharper fall in Manufacturing PMI was caused by steeper declines in all sub-indexes, save for Supplier Delivery Time which actually recorded stronger improvement over the previous month. In fact, the improvement is the highest on record and marks the sixth straight month of improvement. This underscores the lasting effects of measures to ease transport during the year, culminating in the liberalization of the petroleum downstream sector, a move that has smoothened transport flows in the country. Improvements were particularly strong in Manufacturing sectors with bulky components such as Primary Metal, Electrical Equipment, and Transport Equipment. Focusing on prices, Manufacturing output prices sustained their upward trend from the start of the year, albeit rising at a slower pace, whilst input prices accelerated further during the month.

This PMI release comes hot on the heels of official confirmation of Nigeria’s recession and provides compelling evidence of an extended slump in economic output. We expect higher inflation (up to 17.1% in July), tighter monetary conditions (MPR increased 200bps in July) and further naira depreciation (average interbank rate of NGN316/USD compared to NGN298/USD in July) to continue to weigh negatively on business sentiment going forward.