September 8, 2021/CSL Research

The Stanbic IBTC headline Purchasing Managers‘ Index (PMI) came in at 52.2 in August from  55.4 in July. The performance was the slowest in six months (6), which suggests that the  vaccinated optimism that once permeated the global economy might be waning following  the recent emergence of the delta variant of the coronavirus. According to the survey, the  period witnessed a tapered expansion in output, new orders, and employment, while there  was a loss of momentum in demand which led to a dip in optimism. PMI Readings above  50.0 signal an improvement in business conditions on the previous month, while readings  below 50.0 show a deterioration.

The manufacturing subsector continued to show the fastest recovery in the economy’s  private sector, reporting the steepest uptick in the period. Asides from the manufacturing  subsector, the wholesale and retail subsector also expanded, while both services and  agriculture subsectors contracted. The agriculture subsector contracted the most as the  double effect of worsening insecurity, and distorted climate conditions continues to bite  hard. One of the many pointers to the worsening insecurity is the continued rise in the  number of farmers that are currently unable to repay their Anchor Borrowers loan, citing  cases of failure to access their farms for fear of abduction.

The Nigerian economy is currently characterized by increasing prices, worsening insecurity,  infrastructure deficit, among many other issues. In our view, economic growth will continue  to lag optimal levels until these issues are addressed.