Businesses recorded slow improvement in September –Report
Businesses in the country recorded a weak growth in September despite the impact of COVID-19 pandemic, a new report by Stanbic IBTC Bank has said.
The bank disclosed this in the report, which was released on Tuesday and entitled ‘Business conditions continue to improve, albeit at a weaker pace.’
Part of the report read, “The Nigerian private sector remained in growth territory in September, although there were some signs of moderation as rates of expansion in output and new orders softened.
“Companies continued to expand purchasing activity and employment in line with higher new orders. Suppliers’ delivery times improved further amid a lack of road congestion.
“Meanwhile, increased workforce numbers and sufficient capacity to fulfil new orders led to a series – record decline in the level of incomplete work.”
Looking forward, however, it added, business sentiment was the weakest since the start of the survey in January 2014 as some firms reported difficulty planning for the year ahead.
On the price front, over all input price inflation was marked and was driven by increase in raw material costs and unfavourable exchange rates against the dollar.
The report stated that headline figure derived from the survey was the Purchasing Managers’ Index.
It stated that readings above 50.0 signalled an improvement in business conditions on the previous month, while readings below 50.0 showed a deterioration.
At 52.5 in September, it stated, the headline seasonally adjusted PMI signalled expansion and one which extended the current sequence of strengthening business conditions to three months.
Down from 54.6 in August, it said, the reading pointed to a more moderate improvement.
The report noted that output and new orders rose sharply during September.
In both cases, firms attributed growth to improvements in customer demand following the easing of restrictions related to the COVID-19 pandemic.
Higher workloads prompted firms to increase staffing levels which led to the fastest pace of job creation since February.
The rise in workforce numbers, paired with sufficient capacity, led to a series-record depletion in the amount of outstanding business.
It stated that higher purchase costs was the main factor behind strong overall inflationary pressures. Purchase price inflation was substantial following reports of unfavourable exchange rate movements.
It said firms responded to improving customer demand by raising purchasing activity at a sharp pace.
Respondents also reported solid growth in stocks of purchases which was linked to planned increases in output levels.
Prompt orders and quiet road conditions meant that input delivery times shortened to the greatest extent in almost two and a half years.
Looking ahead, it stated, business confidence remained positive overall as firms continued to foresee a rise in output over the year ahead.
It said the sentiment dropped to the lowest in the series so far amid reported that some firms were not planning to expand output at present.
Source: The Punch