Private sector rebounded after March cash crunch – Report

There were signs of recovery in the Nigerian private sector in April as the cash crisis eased, according to a report by Stanbic IBTC Bank of Nigeria.

The report on its Purchasing Managers’ Index titled ‘Nigerian private sector returns to growth in April’, showed key findings that the easing of cash crisis supported renewed rise in new orders; output and purchasing also increased, but employment fell; and there was selling price inflation at three-year low.

Firms reported renewed expansions in new business and output amid improved access to funds.

According to the report, companies remained cautious with regards to hiring, however, and employment fell slightly.

It stated that, “There were mixed trends in terms of prices at the start of the second quarter.

“Input costs increased at a sharper rate, but further efforts to attract customers led firms to increase their selling prices at the softest pace for three years.”

PMI readings above 50.0 signalled an improvement in business conditions on the previous month, while readings below 50.0 showed deterioration.

It stated that, “The headline PMI moved back above the 50.0 no-change mark for the first time in three months during April. At 53.8, the index was up from 42.3 in March and pointed to a solid overall improvement in business conditions in the private sector.

“According to respondents to the latest survey, the recovery in operating conditions reflected an easing of the cash crisis which has severely affected the economy in recent months.”

In the survey, panellists reported a more normal business environment as customer numbers improved in line with greater access to cash.

As a result, it stated, both output and new business expanded sharply in April, ending two-month sequences of decline in each case.

Rebounds in activity were seen across each of the agriculture, manufacturing, services and wholesale & retail sectors.

Business sentiment remained subdued in April, despite a slight pick-up from March.

“In fact, optimism was among the lowest seen since the survey began in January 2014,” the survey said.