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Manufacturing PMI Stands at 48.5% in August 2020 from 44.9% in July 2020

CBN Circulars & Publications	810 VIEWS
CBN Circulars & Publications
810 VIEWS

Thursday, August 27, 2020 / 5:16 PM / By CBN / Header Image Credit: CBN

Introduction

The August 2020 PMI survey was conducted by the Statistics Department of the Central Bank of Nigeria during the period August 10-14, 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 August 2020 PMI

The Manufacturing PMI in the month of August stood at 48.5 index points, indicating contraction in the manufacturing sector for the fourth consecutive months(Fig. 2 and Table 1). However, of the 14 subsectors surveyed, 6 subsectors reported expansion (above 50% threshold) in the review month in the following order: nonmetallic mineral products; cement; plastics & rubber products; transportation equipment; chemical & pharmaceutical products and textile, apparel, leather & footwear. The remaining 8 subsectors reported contraction in the following order: printing & related support activities; electrical equipment; petroleum & coal products; primary metal; furniture & related products; paper products; food, beverage & tobacco products; and fabricated metal products.

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In August 2020, supplier delivery time grew, while Production level, new orders, employment level and raw materials inventories contracted.

Production Level

At 49.2 points, the production level index for the manufacturing sector showed contraction in August 2020 and for the fourth consecutive months. Of the 14 subsectors surveyed, 5 subsectors recorded expansion in production level, 3 subsectors reported same level of production, while 6 subsectors recorded contraction in production in August 2020 (Fig. 3 and Table 2).

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New Orders

At 49.2 points, the new orders index shows slower contraction in August 2020. Six subsectors reported expansion in new orders, 2 subsectors maintained same level, while 6 recorded contraction in the review month (Fig. 4 and Table 3).

Supplier Delivery Time

The manufacturing supplier delivery time index stood at 53.0 points in August 2020, indicating faster supplier delivery time for the fourth time. Seven of the 14 subsectors recorded improved suppliersâ€™ delivery time, 2 subsectors reported same level, while 5 sectors recorded slower delivery time in August 2020 (Fig. 5 and Table 4).

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Employment Level

The employment level index for August 2020 stood at 44.6 points, indicating contraction in employment level for the fifth consecutive months. Of the 14 subsectors, 2 subsectors recorded expansion in employment level in the review month; 3 subsectors recorded same level of employment, while the remaining 9 subsectors recorded lower employment level in the review month (Fig. 6 and Table 5).

Raw material Inventories

The manufacturing sector inventories index contracted for the fifth time in August 2020. At 46.1 points, the index declined in the review month. Four of the 14 subsectors recorded growth in inventories, the petroleum and coal subsector reported same level of inventories, while the remaining 9 subsectors recorded lower raw material inventories in the review month (Fig. 7 and Table 6).

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