2 days Ago By Guardian Nigeria
Private sector activities showed tentative signs of improvement in December 2024, moving to 52.7 points, above the 50 no-change mark for the first time in six months. This is revealed by Stanbic IBTC’s Purchasing Managers’ Index (PMI), which measured the performance of 400 companies in the private sector.
Readings above 50 points signal an improvement in business conditions on the previous month, while readings below 50 show a deterioration. According to the report, overall business conditions improved as new orders increased for the second month running and renewed expansions were seen in output, employment and purchasing. Despite the improvement, inflation rates remained very high in the month.
December’s headline index at 52.7, was a solid change from 49.6 in November, signalling a modest improvement in the health of the private sector that was the most pronounced since January 2024, the report said.
The report added that new orders increased for the fourth time in the past five months, with the pace of expansion quickening to the fastest since May. Businesses noted improving client demand and rising customer numbers. Also, sustained growth of new orders led to a renewed expansion of business activity in December, ending a five-month sequence of contraction.
All four broad sectors signalled rising output at the end of 2024. “Companies also responded to higher new orders by recording fresh rises in both employment and purchasing activity. Growth of input buying helped firms to accumulate stocks of purchases for the first time in five months.
Firms were able to keep on top of workloads and depleted backlogs for the seventh month running, albeit marginally,” the report noted. The report added that there were some signs of capacity pressures emerging in supply chains, with lead times shortening only fractionally and to the least extent since August 2023. While prompt payments and competition among suppliers meant that lead times continued to shorten, poor road conditions and higher demand for inputs caused delays in some cases.
Improving trends across the private sector were recorded despite ongoing strong inflationary pressures. Purchase prices were up amid currency weakness and higher costs for fuel and transportation. Transportation price pressures also contributed to an increase in staff costs.
In turn, companies continued to increase their output prices at a rapid pace, with the rate of inflation quickening slightly from that seen in November. “Although strengthening from the series low seen in the previous survey period, business confidence was still the third-lowest on record. Some firms linked optimism to expected improvements in access to funding, helping them to invest in business expansions, while others were hopeful of an improvement in economic conditions in 2025 and a softening of inflationary pressures.
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