Nigerian businesses in October reported worsening conditions in October as cost pressures triggered by rapid inflation resulted in the sharpest downturn in business activities in the month.
This is according to the Stanbic IBTC Purchasing Managers’ Index (PMI) for October, which also revealed that business activities declined at the sharpest rate in 19 months to 46.9 from 49.8 in September.
It is the sharpest deterioration in business conditions since March 2023.
According to the report, overall input costs rose at one of the sharpest rates on record, prompting a corresponding increase in selling prices.
This led to significant declines in new orders and business activity, with business sentiment reaching its lowest point in the survey’s history.
A sharp rise in purchasing costs, driven by currency weakness and higher fuel and transportation prices, led Nigerian companies to increase their selling prices rapidly. To support workers facing higher living costs, staff pay saw its largest increase in seven months.
However, these steep price hikes significantly impacted customer demand, causing new orders to decline for the first time in three months.
The report states, “The headline PMI dropped to 46.9 in October from 49.8 in September, and signalled a marked deterioration in business conditions that was the most pronounced since March 2023. Central to the worsening business environment in October was an intensification of already strong inflationary pressures. Overall input prices surged higher, with the latest rise the third-fastest in the survey’s history.”
The report noted that companies continued to increase staffing levels, marking the sixth consecutive month of employment growth, although at a modest pace.
Nigeria’s inflation in September increased to 32.7% after a two-month slowdown since July 2024 on the back of an increase in petrol prices leading to a spike in transport prices during the month.
In September, the food inflation rate rose to 37.77% year-on-year, up by 7.13 percentage points from 30.64% in September 2023. Month-on-month, food inflation reached 2.64% in September 2024, a 0.27% increase from 2.37% in August 2024.