Key findings
Steep growth of activity amid higher new orders
Staffing levels stabilise
Output prices increase at record pace
PMI
sa, >50 = improvement since previous month
65
60
55
50
45
40
35
’14 ’15 ’16 ’17 ’18 ’19 ’20
Data were collected 12-26 August 2020
The recovery in the Nigerian private sector gathered momentum in August as demand improved following the easing of restrictions related to the coronavirus disease 2019 (COVID-19). Output and new orders rebounded, rising sharply from July. Employment was broadly stable, although excess capacity remained as a result of the severe declines in new business during the second quarter.
Currency weakness led to another record increase in purchase costs, in turn feeding through to a rise in selling prices unprecedented since the survey began in January 2014.
The headline figure derived from the survey is the Nigeria Purchasing Managers’ Index™ (PMI®), a property of Stanbic IBTC Bank PLC. Readings above
50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.
The headline PMI rose sharply in August to 54.6, up from
50.4 in July. The reading signalled a marked improvement in business conditions, following a return to growth in the previous month.
The rebound in new orders continued midway through the third quarter as client demand strengthened following the easing of COVID-19 restrictions. New business increased for the second month running, and to the greatest extent since January.
Sources: Stanbic IBTC Bank, IHS Markit.
A similar picture was evident with regards to business activity, which rose at a substantial pace that was much stronger than seen in the previous month.
Despite strong rises in workloads during August, data suggested that the steep contractions seen during the second quarter left residual spare capacity. Companies were therefore able to continue depleting backlogs of work while leaving staffing levels broadly unchanged. The stability of employment did bring a four-month sequence of job cuts to an end, however.
Spare capacity was also reported at suppliers. This, alongside relatively quiet road conditions, meant that vendors were able to speed up deliveries in spite of a marked increase in purchasing activity. Stocks of purchases meanwhile rose sharply for the second month running.
Overall input cost inflation quickened to a fresh series record in August, despite a reduction in staff costs. The rise in overall input prices was driven by a record increase in purchase costs, in turn largely the result of currency weakness. In response to higher raw material prices, companies raised their own charges. As was the case with input costs, the increase in selling prices was the quickest since the survey began.
Subdued business sentiment was registered again amid concerns around the lasting impact of COVID-19.
© 2020 IHS Markit
The Nigeria PMI is endorsed and adopted by NBS.
Stanbic IBTC Bank Nigeria PMI®
Contact
Stanbic IBTC Bank
Gbolahan Taiwo Economist, Research T: +234 (1) 422 8290
gbolahan.taiwo@stanbicibtc.com
Usman Imanah Communications Manager T: +234 7066 3172 67
usman.imanah@stanbicibtc.com
IHS Markit
Andrew Harker Economics Director T: +44 1491 461 016
andrew.harker@ihsmarkit.com
Katherine Smith Public Relations
T: +1 781 301 9311
katherine.smith@ihsmarkit.com
Methodology
The Stanbic IBTC Bank Nigeria PMI® is compiled by IHS Markit from responses to questionnaires sent to purchasing managers in a panel of around 400 private sector companies. The panel is stratified by detailed sector and company workforce size, based on contributions to GDP. The sectors covered by the survey include agriculture, mining, manufacturing, construction, wholesale, retail and services.
Survey responses are collected in the second half of each month and indicate the direction of change compared to the previous month. A diffusion index is calculated for each survey variable. The index is the sum of the percentage of ‘higher’ responses and half the percentage of ‘unchanged’ responses. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease. The indices are then seasonally adjusted.
The headline figure is the Purchasing Managers’ Index™ (PMI). The PMI 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%). For the PMI calculation the Suppliers’ Delivery Times Index is inverted so that it moves in a comparable direction to the other indices.
Underlying survey data are not revised after publication, but seasonal adjustment factors may be revised from time
to time as appropriate which will affect the seasonally adjusted data series.
August data were collected 12-26 August 2020.
For further information on the PMI survey methodology, please contact economics@ihsmarkit.com.
About Stanbic IBTC Bank
Stanbic IBTC Bank is a subsidiary of Stanbic IBTC Holdings Plc, a full service financial services group with a clear focus on three main business pillars – Corporate and Investment Banking, Personal and Business Banking and Wealth Management. Standard Bank Group, to which Stanbic IBTC Holdings belongs, is rooted in Africa with strategic representation in 20 key sub-Saharan countries and other emerging markets; Standard Bank has been in operation for over 151 years and is focused on building first-class on-the-ground banks in chosen countries in Africa and connecting other selected emerging markets to Africa and to each other.
About IHS Markit
IHS Markit (NYSE: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions.
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About PMI
Purchasing Managers’ Index™ (PMI®) surveys are now available for over 40 countries and also for key regions including the eurozone. They are the most closely watched business surveys in the world, favoured by central banks, financial markets and business decision makers for their ability to provide up-to-date, accurate and often unique monthly indicators of economic trends.
ihsmarkit.com/products/pmi.html.
Disclaimer
Please note that the Stanbic IBTC Bank Nigeria PMI should not be taken as a substitute for official statistics, but may be used in conjunction with them.
Stanbic IBTC Bank Nigeria (“Stanbic IBTC”) has issued and is responsible for production of this publication. This publication should be regarded as being for information only and should not be considered as an offer or solicitation to sell, buy or subscribe to any financial instruments, securities or any derivative instrument, or any other rights pertaining thereto (together, “investments”). Stanbic IBTC does not express any opinion as to the present or future value or price of any investments referred to in this publication. This publication may not be reproduced without the consent of Stanbic IBTC.
The information contained in this publication has been compiled from sources believed to be reliable, but, neither Stanbic IBTC, nor any of its directors, officers, or employees accepts liability for any loss arising from the use hereof or makes any representations as to its accuracy and completeness. The information contained in this publication is valid as at the date of this publication. This information is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the matters discussed herein.
This publication does not constitute investment advice and has been prepared without regard to individual financial circumstances, objectives or particular needs of recipients. Readers should seek their own financial, tax, legal, regulatory
and other advice regarding the appropriateness or otherwise of investing in any investments or pursuing any investment strategies. Investec operates exclusively on an execution only basis.
An investment in any of the investments discussed in this publication may result in some or all of the money invested being lost. Past performance is not a reliable guide to future performance. To the extent that this publication is deemed to contain any forecasts as to the performance of any investments, the reader is warned that forecasts are not a reliable indicator of future performance. The value of any investments can fall as well as rise. Foreign currency denominated investments are subject to fluctuations in exchange rates that may have a positive or adverse effect on the value, price or income of such investments. Certain transactions, including those involving futures, options and other derivative instruments, can give rise to substantial risk and are not suitable for all investors.
The intellectual property rights to the data provided herein are owned by or licensed to IHS Markit. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without IHS Markit’s prior consent. IHS Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall IHS Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers’ Index™ and PMI® are either registered trade marks of Markit Economics Limited or licensed to Markit Economics Limited. IHS Markit is a registered trademark of IHS Markit Ltd. and/or its affiliates.
© 2020 IHS Markit
