New orders, output and employment witnessed sharp falls as prices rose amid supply chain disruption in April.
These was the summary of a report of April business activities, which also witnessed low manufacturing.
The Nigeria Purchasing Managers’ Index report by Stanbic IBTC Bank Plc for April showed a decline in the private sector.
According to the report, the Nigeria PMI headline sank to 37.1 index points in April 2020 compared to 53.8 index points recorded in March.
The report reflected economic indicators got from monthly surveys of private sector companies, and it was targeted at providing information about current business conditions to various stakeholders.
Readings above 50.0 indicated an improvement in business conditions while readings below 50.0 showed deterioration, it stated.
According to the report, the advent of COVID-19 and the lockdown imposed to curtail its spread led to a severe deterioration in business conditions across the Nigerian private sector during April.
Both output and new orders decreased at rates unprecedented in more than six years, the report revealed.
The report showed that firms scaled back employment as most companies kept their staffing levels unchanged at the start of the second quarter.
Concerning purchasing activity, difficulties in securing materials led to a sharp rise in purchase costs, and this was passed on in the form of higher output prices.
As companies continued to increase their selling prices at a marked pace in April as a result of the higher purchase costs, the rate of inflation rose to a new high.
The introduction of the lockdown prevented many firms from completing outstanding orders, thereby making backlogs of work to increase for the first time in three months.
Specifically, the Nigeria PMI survey report for April was a weighted average of five indices which are new orders (30 per cent), output (25 per cent), employment (20 per cent), suppliers’ delivery times (15 per cent) and stocks of purchases (10 per cent), the report stated.
Despite many companies experiencing a drop in confidence due to a severe decline in business activities across the country when compared to the index of the previous six months, it stated that there was optimism that businesses would begin to bounce back steadily once the pandemic eased.