Stanbic IBTC: Nigeria's PMI higher at 54.2 in April

Nigeria's economy is showing signs of resilience as the Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) climbed to 54.2 points in April, indicating a further improvement in business conditions. Abdulazeez Kuranga, Regional Economist for West Africa at Standard Bank Group, sheds light on the key findings of the report. The PMI has been steadily ranging between 53 to 54 points since the start of the year, reflecting a positive trend in how businesses are navigating reforms and economic challenges. This sustained performance is reminiscent of the period between September 2018 and January 2019 when Nigeria consistently scored 52 to 53 points. The moderation in exchange rate depreciation and energy costs, coupled with softening inflationary pressures, has led to an uptick in consumer demand. As a result, businesses are expanding their output and increasing employment. While companies are hiring more contract staff to meet growing demand and mitigate rising costs, they are also boosting wages to support their workforce. The optimism among managers is underpinned by the belief that the Nigerian government will continue its reform agenda and maintain macroeconomic stability. Market participants, including corporate and offshore investors, are optimistic about the economic outlook for Nigeria. However, a key challenge remains the volatility of crude oil prices, which account for 88% of Nigeria's total exports and a significant portion of government revenue. Lower oil prices could lead to an increase in fiscal deficits, necessitating additional borrowing. The government is expected to recalibrate its budget in response to the evolving economic landscape and avoid over-reliance on unorthodox financing measures. The focus is on prudent fiscal management to ensure sustainable economic growth and stability. Despite the uncertainties posed by oil price fluctuations, the overall sentiment regarding Nigeria's economic prospects remains positive.