- The November 2024 Purchasing Manager’s Index shows that Nigeria’s private sector was impacted by heightened inflationary pressures
- These pressures were exacerbated by naira depreciation and higher fuel prices
- The report also revealed that businesses experienced reduced workforce levels in November
The November 2024 Purchasing Managers’ Index (PMI) report by S&P Global revealed that Nigeria’s private sector was impacted by heightened inflationary pressures in the month, driven by currency depreciation and escalating fuel prices.
The report, released on Monday, December 2, showed that these factors increased input costs, restricted purchasing activities, and slowed growth across various sectors.
The PMI for November stood at 49.6, which shows a decline in private-sector activity and signalled a marked deterioration in business conditions compared to October’s 46.9.
Though the report noted a slight recovery in new orders and a softer contraction in output, steep price pressures continued to challenge businesses.
The report stated, “The less pronounced deterioration in business conditions partly reflected a renewed expansion in new orders, though elevated prices still deterred many customers.”
Businesses experienced reduced workforce levels
The report also noted that employment levels also fell for the first time in seven months, bringing to an end a modest period of job creation.
The decline in workforce levels was more pronounced in the services sector, as businesses were unable to sustain operations due to rising costs.
The report noted, “The inflationary environment has created significant strain for businesses, with some unable to maintain workforce levels.”
The report also noted that staff costs also increased as companies offered additional support for employees to ease higher transportation and living expenses.
Businesses also increased output processes to offset rising input costs. The report noted that many companies cut back on purchasing activities and inventories, while some scaled-down operations entirely.
The report also noted that while the agriculture and manufacturing sectors recorded output growth, the wholesale, retail, and services sectors suffered declines.
Heightened inflationary pressures impacting businesses
Inflationary pressures have contributed to shrinking the purchasing power of Nigerians and escalating an already heightened cost of living crisis.
These pressures are exacerbated by continued naira depreciation and higher transportation costs due to an increase in the price of fuel, a fallout of the infamous fuel subsidy removal.
With many months of increase, the inflation rate reached a new 28-year all-time high of 34.19 per cent in June 2023. It tapered in July after 19 months, declining to 33.40 per cent. The rate declined further for the second consecutive month in August to 32.15 per cent before increasing to 32.70 per cent in September 2024.
As of October 2024, Nigeria’s inflation rate reached 33.88 per cent, according to the National Bureau of Statistics.
Inflation: Nigerians to spend 54.9% income on food in next 6 months, projects CBN
Meanwhile, TheRadar reported that according to a recent survey by the Central Bank of Nigeria (CBN), the escalating inflation rate in Nigeria is expected to lead households to dedicate the largest portion of their earnings to food expenses over the next six months.
The survey, conducted from July 22 to 26, 2024, reveals that the inflation rate has surged to 33.40 per cent, with food inflation exceeding 40 per cent.
