Nigeria’s business confidence rises to 4-month high on easing inflation

The latest monthly PMI by Stanbic IBTC Bank released on Tuesday showed the headline index increased to 54.3 in March from 53.7 in February, marking the highest level since January.

A PMI above 50.0 signals an expansion in business activity, while a reading below that threshold indicates a contraction.

As input cost recorded its slowest pace since May 2023 amid easing inflationary pressure, Nigeria’s business activities reported its no-change mark for the fourth consecutive month.

This is as the latest improvement in business conditions in the private sector was solid and the most marked since the start of 2024.

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“March’s uptick reflects a solid improvement in business conditions for the fourth consecutive month, driven by a sharp increase in new orders – the fastest in 14 months,” it said.

According to the report, the private sector’s performance was buoyed by stronger domestic demand, resulting in expanded output across all major sectors, including manufacturing, trade, and real estate.

Additionally, it said employment levels saw a modest rise, marking the most substantial increase in seven months. While some firms resorted to contract-based hiring, the overall job market sentiment remained positive.

One of the most notable findings in the report was the decline in input cost inflation, which reached its lowest level since May 2023.

According to the Nigerian Bureau of Statistics, the headline inflation rate eased to 23.18 percent in February, a decrease of 1.30 percent compared to the 24.48 percent recorded in January.

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The report said that “all items less farm produce and energy’’ or core inflation, which excluded the prices of volatile agricultural produce and energy, stood at 23.01 percent in February on a year-on-year basis.

“This decreased by 2.12 percent compared to 25.13 percent recorded in February 2024.

Authors of the PMI report added that softer price pressures encouraged firms to stockpile inputs, anticipating stable cost conditions in the coming months.

It said. “As inflationary pressures eased, the pace of price increases for goods and services slowed for the third consecutive month.”

“Softening inflationary pressures are helping to improve domestic demand conditions, in turn supporting an overall improvement in private sector activity. Consequently, private sector activity strengthened for the fourth consecutive month,” it added.