Manufacturing activities in the country contracted for a second consecutive month in a row in March as cash scarcity in Africa’s biggest economy hampered private sector activity.
The drop in production consequently led to reduced sales as manufacturers navigated through headwinds occasioned by a shortage of cash.
According to the latest edition of Stanbic IBTC Bank Nigeria PMI, which measures manufacturing activity in the country, Nigeria’s purchasing manager index for March reduced from 44.7 in February to 42.3 in March.
The latest drop signals the second-deepest plunge since the survey started more than nine years ago. Any reading above 50 indicates a healthy industry. The 42.3 points recorded in March point towards contraction.
“The continuous decline relative to February reflects the negative impact of cash shortage across different segments of the economy over the past two months,” said Muyiwa Oni, head of Equity Research West Africa at Stanbic IBTC Bank.
“Currency in circulation declined by 58% in January 2023 to N1.39tn from N3.01tn in December 2022, while currency outside the banks declined by 72% in January 2023 to N789bn from N2.57tn in December 2022,” Mr Oni added.
The contraction also meant that both staffing levels and purchasing activities fell.
According to the survey, output prices rose “at the softest pace in almost three years,” while suppliers’ delivery times reduced after having lengthened in the previous month.
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