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By Chinwendu Obienyi
Owing to price pressures, Nigeria’s business activity index dropped to 49.2 points in the month of July, latest data from the Purchasing Managers’ Index (PMI) revealed on Thursday.
This is against 50.1 points that was recorded in the previous month. A reading below 50 points typically indicates a decline.
This downturn was compounded by a 7% depreciation of the Naira in the past month, exacerbating inflation and increasing costs for businesses reliant on imports.
The weaker currency adds to the economic challenges, putting pressure on businesses and consumers alike, and potentially leading to a cycle of reduced spending and further economic slowdown.
According to the report released by Stanbic IBTC Bank, the renewed worsening in the health of the private sector mainly reflected the first reductions in output and new orders since November last year. In both cases, rates of decline were only modest.
It stated that however, anecdotal evidence continued to highlight the negative impact of sharp price increases on customer demand, with clients often unwilling or unable to commit to new projects. The report said, “Selling prices continued to increase sharply at the start of the third quarter as companies passed higher input costs through to their customers,” it said.
This was despite the rate of inflation easing to the slowest since May 2023 amid reports from some panelists that they had lowered charges as part of efforts to secure sales.”
Meanwhile, the Naira which opened the month of July at N1,503.3/$1, closed the month at N1,608.73/$1, representing a 7% decrease in one month, the worst monthly drop since February when it fell by 9%.
January remains the worst this year with a monthly drop of 60%. Data from the FMDQ had recently indicated the naira closed at N1,611.40 on Monday, July 29th, 2024, compared to the close of N1,609 on Friday.
Intra-day highs and lows also printed N1,622/$1 and N1,500/$1, suggesting a wide disparity across rates on the official market.
Market turnover recorded $179.34 million compared to $168.3 million on Friday. Total market turnover recorded in July so far is about $3.7 billion compared to $3.3 billion in the whole of June 2024.
