Business conditions continue to improve, albeit at a weaker pace

Key findings

Softer increases in output and new orders Series-record fall in backlogs
Business sentiment hits series low
PMI
sa, >50 = improvement since previous month

65
60
55
50
45
40
35

’14 ’15 ’16 ’17 ’18 ’19 ’20

Data were collected 11-28 September 2020

The Nigerian private sector remained in growth territory in September, although there were some signs of moderation as rates of expansion in output and new orders softened. Companies continued to expand purchasing activity and employment in line with higher new orders. Suppliers’ delivery times improved further amid a lack of road congestion. Meanwhile, increased workforce numbers and sufficient capacity to fulfil new orders led to a series- record decline in the level of incomplete work. Looking forward, however, business sentiment was the weakest since the start of the survey in January 2014 as some firms reported difficulty planning for the year ahead.
On the price front, overall input price inflation was marked and was driven by increase in raw material costs and unfavourable exchange rates against the US dollar.
The  headline  figure  derived  from  the  survey  is  the
Purchasing Managers’ Index™ (PMI®). Readings above
50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.
At 52.5 in September, the headline seasonally adjusted PMI signalled expansion and one which extended the current sequence of strengthening business conditions to three months. That said, down from 54.6 in August, the reading pointed to a more moderate improvement.
Output and new orders rose sharply during September.

Sources: Stanbic IBTC Bank, IHS Markit.

In both cases, firms attributed growth to improvements in customer demand following the easing of restrictions related to the coronavirus disease 2019 (COVID-19).
Higher workloads prompted firms to increase staffing levels which led to the fastest pace of job creation since February. The rise in workforce numbers paired with sufficient capacity led to a series-record depletion in the amount of outstanding business.
Higher purchase costs was the main factor behind strong overall inflationary pressures. Purchase price inflation was substantial following reports of unfavourable exchange rate movements.
Firms responded to improving customer demand by raising purchasing activity at a sharp pace. Respondents also reported solid growth in stocks of purchases which was linked to planned increases in output levels. Prompt orders and quiet road conditions meant that input delivery times shortened to the greatest extent in almost two-and- a-half years.
Looking ahead, business confidence remained positive overall as firms continue to foresee a rise in output over the year ahead. That said, sentiment dropped to the lowest in the series so far amid reports that some firms were not planning to expand output at present.



© 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
HYPERLINK “mailto:gbolahan.taiwo@stanbicibtc.com” gbolahan.taiwo@stanbicibtc.com







Usman Imanah Communications Manager T: +234 7066 3172 67
HYPERLINK “mailto:usman.imanah@stanbicibtc.com” usman.imanah@stanbicibtc.com

IHS Markit
Shreeya Patel Economist
T: +44 134 432 8196
HYPERLINK “mailto:shreeya.patel1@ihsmarkit.com” shreeya.patel1@ihsmarkit.com

Katherine Smith Public Relations
T: +1 781 301 9311
HYPERLINK “mailto:katherine.smith@ihsmarkit.com” 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.

September data were collected 11-28 September 2020.
For further information on the PMI survey methodology, please contact  HYPERLINK “mailto:economics@ihsmarkit.com” 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.
IHS Markit is a registered trademark of IHS Markit Ltd. and/or its affiliates. All other company and product names
may be trademarks of their respective owners © 2020 IHS Markit Ltd. All rights reserved.

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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
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