•As increase in prices creep into H2’20
By Nkiruka Nnorom
Nigerian private sector returned to expansion in July, after three successive months of decline, following an uptick in new orders and easing of the coronavirus (COVID-19) induced lockdown.
This is contained in the Stanbic IBTC Bank’s Purchasing Managers Index (PMI) Report for July, 2020.
The report shows that though both business activity and new orders increased, the severity of the COVID-19 downturn meant that spare capacity remained evident, leading to a further reduction in employment.
Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show deterioration.
The headline PMI posted 50.4 in July, up from 46.4 in June and above the 50.0 no-change mark for the first time since March, signaling only a slight improvement in business conditions following a severe downturn due to the COVID-19 pandemic.
The report further shows that the recent surge in prices extended into the second half of the year, with overall input prices rising at the sharpest pace in the survey’s history.
In response, firms also raised their output prices at the fastest rate since the survey began in January 2014.
According to the report, signs of improving demand were central to a strengthening of business conditions. “New orders increased for the first time in four months. Business activity also returned to growth for the first time since March on the back of higher new orders and an easing of the lockdown,” the report said.
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