Private sector returns to growth as cash crisis eases

There were signs of recovery in the Nigerian private sector in April as the cash crisis eased. The headline Purchasing Managers Index, PMI moved back above the 50.0 no-change mark for the first time in three months during April.

At 53.8, the index was up from 42.3 in March and pointed to a solid overall improvement in business conditions in the private sector. Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.

The PMI, which is a monthly survey by Stanbic IBTC Bank compiled by London-based market intelligence powerhouse, S&P Global Platts and endorsed by the National Bureau of Statistics, added that firms reported renewed expansions in new business and output amid improved access to funds.

It added that the relatively subdued outlook meant that companies remained cautious with regards to hiring, and reduced employment marginally for the third month in a row.

“There were mixed trends in terms of prices at the start of the second quarter. Input costs increased at a sharper rate, but further efforts to attract customers led firms to increase their selling prices at the softest pace for three years.

“As a result, both output and new business expanded sharply in April, ending two-month sequences of decline in each case. Rebounds in activity were seen across each of the agriculture, manufacturing, services and wholesale and retail sectors,” the report noted.

According to respondents, the recovery in operating conditions reflected an easing of the cash crisis which has severely affected the economy in recent months.

The report indicated that firms responded to greater new orders and a rise in output requirements by building their stocks of purchases in the month.