As opposed to its July 2016 PMI put at 48.8 points, Stanbic IBTC said in its August PMI report that the index fell to 46.3 points attributed ‘to subdued underlying demand that resulted in lower output’.
The result summarised that Nigeria’s economy had slipped further downward in August when compared to July index
Commenting on the August PMI, Ayomide Mejabi, a lead Economist at Stanbic IBTC said “After a modest deterioration in business conditions in July, the Stanbic IBTC Bank PMI for August signalled a faster contraction reaching a survey record low of 46.3”.
He added that “The brief relief experienced in July was probably a result of improved market sentiment following the introduction of reforms in the foreign exchange market, which were aimed at attracting foreign capital flows that are needed to boost domestic investment.”
On a comparative basis, he said “The PMI readings for July and August suggest that the economic contraction experienced in the first half of the year may still have some way to go as the foreign exchange market struggles to clear out the FX backlog overhang. The effects of the continued FX supply-demand imbalance appeared to be anecdotally confirmed by the output PMI index which fell to its lowest in the history of the survey”.
“The substantial number of survey respondents who reported a downturn in output due to weakening demand and the weakening naira suggests that it could take a while before conditions improve,” Mejabi said. “The slowing pace of increase in the output prices PMI index suggests that inflation may have eased in August.” he added