Sustained rise in inflation rate has stagnated business operations in Nigeria with the Purchasing Managers' Index, PMI, still below the 50.0 points readings.
PMI tracks operating environment of businesses which leads to improvement or otherwise in business performance.
PMI readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.
According to the Stanbic IBTC' s PMI report released yesterday though there were some signs of improvement midway through the final quarter of the year, factors bordering on rising prices of goods and unemployment have combined to suppress the PMI in November.
The report stated: "Employment was down and companies continued to lower their purchasing amid steep price pressures.
"The headline PMI posted below the 50.0 no-change mark for the fifth consecutive month in November to signal further deterioration in business conditions in the private sector.
"That said, at 49.6 the latest reading was up from 46.9 in October and pointed to only a marginal decline. The less pronounced deterioration in business conditions in part reflected a renewed expansion in new orders, which rose slightly following a solid fall in October. "Although there were some tentative signs of demand improving, companies reported that customers were often deterred by high prices.
"The inflationary environment and muted demand conditions meant that business activity continued to fall, the fifth month running in which that has been the case.
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"The latest reduction was only marginal, however. Sector data pointed to increases in output in agriculture and manufacturing, but decreases in wholesale & retail and services."
Commenting on the report, Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank, said: "The Nigerian private sector activities deteriorated further in November, albeit at a less pronounced rate relative to October. This less pronounced deterioration was primarily due to the return to growth of new orders in November, having decreased solidly in October. Notably, new orders have now risen in three of the past four months, although the latest expansion was only modest. Some panellists saw signs of demand picking up, but others reported that high costs again acted to deter customers. Elsewhere, higher energy prices, increases in the cost of raw materials, and lingering currency weakness continue to lead to intensification of price pressures in November."
