The global economy continued in expansion territory for the ninth consecutive month in March 2021 as output and new business orders continued to grow; notably, the new export orders index expanded to 52.4 points (from 50.2 points in February) while the input cost index spiked to 61.6 points (from 59.9 points).
This increased cost was partly borne by consumers as the output price index rose to 55.9 from 54.0.
With regard to jobs, the J.P. Morgan Global Composite Employment Index expanded to 51.6 points in March (from 50.1 points in February) amid improved business confidence at both manufacturers and service providers. In the global energy market, the latest statistics from the U.S.
Energy Information Administration showed that world crude oil consumption rebounded m-o-m by 2.35% to 95.89 million barrels per day (mbpd) while world crude oil supply shrank 1.96% to 92.17 mbpd as of February 2021. Meanwhile, the world rig count rose by 7.35% to 1,270 as at February (although it fell to 1,231 in March amid the COVID-19 scare).
Amid relatively stronger crude oil market fundamentals, global crude oil prices generally rose in the month of March – brent crude oil spot price rose m-o-m, on average, by 5.34% to USD65.61 a barrel in March 2021. Nigeria’s business activity remained in expansion territory as the IHS Markit-Stanbic IBTC headline PMI rose faster to 52.9 points in March (from 52.0 points in February).
New orders and output expanded, egging greater staffing and reducing backlogs. Raw materials shortage also drove input costs higher. Meanwhile, annual inflation (consumer price) rate continued to trek northwards, having risen to 17.33% in the month of February (from 16.47% recorded in January).
The increase in the inflation rate was caused by broad-based price increases in the food and non-food categories, albeit food prices continued to exert greater pressure.
Exchange rate pressure, increase in energy prices, insecurity in the food-producing parts of the country and a weaker harvest season continued to be the major drivers of inflation.
The normal yield curve at the end of March was relatively higher than the yield curve as at the end of February, – especially at the short end, as stop rates at the primary market trended higher (bearish flattening) – as inflationary pressure increased and foreign exchange rate pressure was sustained.