Despite predictions of a huge rise in unemployment due to the negative impact of the coronavirus pandemic (COVID-19) on businesses in the country, the Nigeria Purchasing Managers’ Index (PMI) report has revealed that employment in Nigeria decreased marginally as about 98% of companies kept their workforce numbers.
The report also showed that new orders, output, employment level, suppliers’ delivery, and stock purchases rose to 40.7 index points in May 2020, a 3.6 increase from 37.1 index points recorded in April 2020.
The Nigeria PMI survey report, a property of Stanbic IBTC Holdings PLC, is a collection of economic indicators obtained from monthly surveys of Nigeria private sector companies. The sectors covered by the survey include agriculture, mining, manufacturing, construction, wholesale, retail and services. The indices vary between 0 and 100, with a reading above 50 indicating an improvement in business conditions compared to the previous month.
According to the PMI report, the Nigerian private sector remained in a deep downturn during May, with rates of decline in output and new orders only slightly softer than the unprecedented falls recorded in April 2020. Furthermore, the rate of purchase cost inflation hit a record high for the second month running, with the scarcity of materials, currency weakness and higher costs relating to logistics leading to higher purchase prices.
The report further stated that due to the lockdown and restrictions on operations, firms experienced delays to orders received which resulted in an increase in backlogs of work for the second month running. While suppliers’ delivery times shortened slightly, reduced activity requirements led to a second successive decline in input buying while inventory holdings fell.
The Nigeria PMI report is a weighted average of the following five indices: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%) and Stocks of Purchases (10%). It showed an increase in companies’ selling prices at a marked pace in May as a result of the higher purchase costs and the rate of output price inflation accelerated to a new record level.
Although business confidence dropped to a 29 month low in May, the rate of contraction is easing slightly as a result of relaxing the lockdown restrictions.