PMI report: growth dips on subdued demand, price pressure

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The Purchasing Managers’ Index (PMI) report for June showed that a broad stagnation of the Nigerian private sector, subdued demand and intense price pressures led to slowdowns in growth of output and new orders.

It also led to fractional rise in employment. “There were signs of inflationary pressures picking up, with purchase prices, staff costs and selling charges all increasing more quickly than in May,” the report said.

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 registered only fractionally above the 50.0 no-change mark in June to signal broadly unchanged business conditions at the end of the second quarter. At 50.1, the index was down from 52.1 in May and the lowest in seven months,” it said.

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The report explained that although new orders continued to rise in June, the rate of expansion was only marginal and the weakest in the current seven-month period of growth.

There were some reports of underlying demand improving, but sharp price rises meant that customers faced challenges being able to commit to new projects.

Companies increased their selling prices rapidly again in June, with the pace of inflation quickening slightly from that seen in May.

The sharper rise in output prices was in tandem with a faster increase in input costs. Purchase price inflation was recorded amid currency weakness and higher raw material costs, particularly those related to animal feed.

Meanwhile, efforts to help workers with increased living and transportation costs led to a further solid rise in wages. In line with the picture for new orders, output rose at a slower pace during June. The rate of expansion was slight and the weakest in four months.

Provided by SyndiGate Media Inc. (Syndigate.info).