Nigeria’s Business Activity Is Growing Again, But Costs Are Rising

A number above 50 means business activity is growing. The latest result shows that activity continued to expand across Industry, Services and Agriculture.

The improvement was broad. Twenty three of the 32 subsectors covered by the survey recorded growth.

Industrial activity also became stronger, with the Industry PMI rising from 50.6 points in August to 52.0 points in September. Services remained in expansion at 53.2 points, while Agriculture recorded its 26th straight month of growth at 53.1 points.

But there is another side to the numbers. Businesses are still dealing with rising costs. The composite input price index increased by 0.8 points in September, while the output price index fell by 0.5 points.

This means some businesses are paying more to operate without being able to increase their own prices by the same amount.

That can be a difficult situation for a business owner. More customers and more orders sound like good news, but higher costs can quickly reduce the money left after expenses are paid. A company may therefore be growing in sales while seeing little improvement in its actual profit.

This is especially important for smaller businesses. A shop may sell more products but spend more on transportation, electricity and supplies. A manufacturer may receive more orders but spend more on raw materials. A service company may have more customers while paying more for staff, technology and other operating needs.

The latest numbers therefore show an economy that is moving in a better direction, but not one where every business is comfortable. Growth creates opportunities, but businesses still need to understand their costs and know which parts of their operations are producing real value.

For business owners, this is the time to look beyond sales numbers. Knowing how much it costs to serve each customer, deliver each product and run each part of the business can make the difference between growth that looks good and growth that actually improves the business.

With tools and services from Auxi Sherpa⁠, businesses can organize their operations, customer processes and business information more efficiently, giving owners a clearer picture of what is happening as the business grows.

Also read: Why Rising Business Costs Can Make Growth Harder to Feel

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