Stanbic IBTC Purchasers Managers Index report for January 2021 showed that output prices increased at a substantial rate during the period.
In its report titled ‘PMI hits six-month low in January amid sharp price pressures’ which was released on Thursday, it also stated that there was softer increases in output and new orders, as well as solid contraction in workforce numbers.
Part of the report read, “Latest data signaled an expansion in the Nigerian private sector in January, with a solid rise in new orders underpinning growth.
“However, substantial increases in input costs and selling prices contributed to a moderation in expansion of outputs and purchasing activity.
“As a result, firms looked to cut costs by reducing their workforce. Nevertheless, the degree of positive sentiment improved to the highest since April last year, with hopes of greater demand fueling optimism.”
It stated that readings above 50.0 signaled an improvement in business conditions on the previous month, while readings below 50.0 showed a deterioration.
According to the report, the headline PMI registered at 50.7 in January, down from 51.8 in December, but signalled an improvement in business conditions at the Nigerian private sector.
“That said, the latest reading indicated the softest rate of expansion since July,” it stated.
New order inflows rose solidly in January, despite the pace of growth moderating from that in December.
It stated that according to firms, new client wins and an improving demand environment led to the uptick.
Output rose marginally, which extended the current period of growth to two months.
Anecdotal evidence suggested that a rise in demand offset the negative impacts of higher prices.
It stated that “Average cost burdens faced by private sector firms in Nigeria rose at a substantial pace.
“According to panel members, material shortages, unfavourable exchange rate movements and higher wages drove the latest uptick.
“Firms passed higher expenses onto clients with the rate of charged inflation the sharpest since August and one of the fastest in the survey’s seven-year history.”
As part of efforts to reduce cash outflows, it stated, firms cut workforce numbers at the start of the year.
The rate of job shedding was solid and the second sharpest in the series.
Despite this, firms were able to complete existing orders with backlogs reducing for the eighth month running.