Exchange rate gains during the month of April led to a slowdown in inflation pressure, according to the Stanbic IBTC Nigeria Purchasing Managers Index (PMI) in the month of April.
The country’s PMI in the month under review rose marginally to 51.1 from 51.0 recorded in March on the back of an increase in new orders or businesses and a slowdown in inflation. The increase in PMI represents a five-month consecutive improvement in business conditions.
However, the report noted that business conditions have continued to be influenced by exchange rate changes, which impact prices, noting that an increase in the naira’s value caused the slowest rise in prices in about one year.
Furthermore, the manufacturing and agricultural sectors saw the highest increase in output as the services industry declined. Also, employee expenses increased at the slowest pace in about 13 months, but some companies reported downsizing over elevated costs.
Businesses also saw a decrease in suppliers’ delivery time as higher new orders, increase in investment, and advertising are projected to fuel growth in the next 12 months.
Speaking on the report, Head of Equities Research at Stanbic IBTC Nigeria, Muyiwa Oni, stated that headline inflation is approaching its zenith, projecting it to peak in May before a slide in the second half of the year.
He also stated that the CBN may further increase interest rates during its Monetary Policy Committee (MPC) meeting in May but noted that interest rates in sectors like manufacturing, construction, and real estate will see some softening going forward.
He said, “Nigeria’s private sector activity started the second quarter on strong, albeit modest footing as the slower rate of price increases supported a rise in the growth of new orders.”