Nigerian businesses reported worsening conditions in October amid inflationary pressures – Report

Nigerian businesses reported worsening conditions in October as cost pressures triggered by rapid inflation led to the sharpest decline in business activity in the month.

This according to the Stanbic IBTC Purchasing Managers Index (PMI) for October, which revealed that business activity fell by the sharpest rate in 19 months to 46.9, from 49.8 in September.

This is the sharpest deterioration in business conditions since March 2023.

According to the report, general input costs increased at one of the highest rates in history and there was a parallel increase in sales prices.

This led to significant declines in new orders and business activity, and business confidence reached its lowest point in the survey’s history.

Foreign exchange weakness and a sharp increase in purchasing costs resulting from high fuel and transportation prices have led Nigerian companies to rapidly increase their sales prices. Staff salaries have seen their biggest increase in seven months in a bid to support workers facing higher living costs.

However, these high price increases significantly affected customer demand, causing new orders to decrease for the first time in three months.

The report states: “The headline PMI fell from 49.8 in September to 46.9 in October, signaling a marked deterioration in business conditions that is the most significant since March 2023. At the heart of the deteriorating business environment in October was the intensification of already strong inflationary pressures. General input prices have risen, with the latest increase being the third fastest in the survey’s history.”

The impact of price pressures on staff and demand

The report noted that companies continued to increase staffing levels, marking a sixth consecutive month of employment growth, albeit at a moderate pace.

• While some companies hire short-term staff to ensure that work is completed on time, others have reduced their workforce due to cost pressures.

• In addition, price pressures led to a reduction in purchasing activity; Companies reduced input purchases in response to declining customer demand, leading to the steepest decline in purchases since March 2023. As a result, input stocks also decreased for the third consecutive month.

• Price pressures led to a reduction in purchasing activity; Due to decreasing customer demand, companies cut back on input purchases. This decline in purchases was the sharpest recorded since March 2023.

What you need to know

Inflation in Nigeria rose to 32.7% in September, following a two-month slowdown since July 2024, as the rise in oil prices led to an increase in transport prices during the month.

In September, food inflation increased by 7.13 points to 37.77%, from 30.64% in September 2023. Compared to the previous month, food inflation increased by 0.27% from 2.37 to 2.64% in September 2024. % in August 2024.

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