Manufacturing PMI Stands at 44.9% in July 2020 from 41.1% in June 2020

Wednesday, July 29, 2020 / 5:24 PM / By CBN / Header Image Credit: CBN

Introduction

The June 2020 PMI survey was conducted by the Statistics Department of the Central Bank of Nigeria during the period June 8-12, 2020. The respondents were purchasing and supply executives of manufacturing and non-manufacturing companies in the 36 states in Nigeria and the Federal Capital Territory (FCT). The Bank makes no representation regarding the individual companies, other than the information they have provided. The data contained herein further provides input for policy decisions.

Data and Method of Presentation

The Manufacturing and Non-Manufacturing PMI Report on businesses is based on survey responses, indicating the changes in the level of business activities in the current month compared with the preceding month. For each of the indicators measured, this report shows the diffusion index of the responses. The diffusion index is computed as the percentage of responses with positive change plus half of the percentage of those reporting no change, except for supplier delivery time, which is computed as the percentage of responses with negative change plus half of the percentage of those reporting no change. The composite PMI for the manufacturing sector is computed as the weighted average of five diffusion indices, namely: production level, level of new orders, suppliers' delivery time, employment level and raw materials inventory/work in progress, with assigned weights of 25%, 30%, 15%, 10% and 20%, respectively. The composite PMI for the non-manufacturing sector is computed from four diffusion indices, namely: business activity, level of new orders, employment level and raw materials inventory, with equal weights of 25% each. A composite PMI above 50 points indicates that the manufacturing/non-manufacturing economy is generally expanding, 50 points indicates no change and below 50 points indicates that it is generally contracting. The subsectors reporting growth are listed in the order of highest to lowest growth, while that reporting contraction are listed in the order of the highest to the lowest contraction.

Manufacturing May 2020 PMI

The Manufacturing PMI in the month of July stood at 44.9 index points, indicating contraction in the manufacturing sector for the third consecutive month (Fig. 2 and Table 1). Of the 14 surveyed subsectors, transportation equipment subsector reported growth (above 50% threshold) in the review month while nonmetallic mineral products sector reported no change. However, the remaining 12 subsectors reported contraction in the following order printing & related support activities; primary metals; fabricated metal products; paper products; food, beverage & tobacco products; chemical & pharmaceutical products; furniture & related products; electrical equipment; plastics & rubber products; petroleum & coal products; textile, apparel, leather & footwear and cement.

In July 2020, supplier delivery time was faster, while Production level, new orders, employment level and raw materials inventories contracted.

Production Level

At 44.7 points, the production level index for the manufacturing sector declined in July 2020 for the third consecutive month. One subsector recorded increased production level, four remained unchanged, while nine subsectors recorded declines in production in July 2020 (Fig. 3 and Table 2).

New Orders

At 43.1 points, the new orders index show contraction for the third consecutive month in new orders index in July 2020. It however grew by 6.7 points above the level recorded in June 2020. Two subsectors reported expansion, 3 remained unchanged while 9 subsectors recorded contraction in the review month (Fig. 4 and Table 3).

Supplier Delivery Time

The manufacturing supplier delivery time index stood at 56.4 points in July 2020, indicating faster supplier delivery time for the third consecutive month. Ten of the 14 subsectors recorded improved suppliers' delivery time, 2 subsectors reported no change while the remaining 2 recorded slower delivery time in July 2020 (Fig. 5 and Table 4).

Employment Level

The employment level index for July 2020 stood at 40.0 points, indicating decline in employment level for the fourth consecutive month. Of the 14 subsectors, 3 subsectors remain unchanged, while the remaining 11 subsectors recorded lower employment level in the review month (Fig. 6 and Table 5).

Raw material Inventories

At 43.2 points, the manufacturing sector inventories index contracted for the fourth consecutive month in July 2020. Three of the 14 subsectors recorded growth in inventories, 2 remained unchanged, while the remaining 9 subsectors recorded lower raw material inventories in the review month (Fig. 7 and Table 6)

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