Nigeria Economy | |
Nigeria Economy | |
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Thursday, February 01, 2018 / 09:53AM /
FBNQuest Research
Our manufacturing Purchasing Managers’ Index
(PMI), the first in Nigeria, slumped in January to 54.6 from 68.7. Our partner,
NOI Polls, has gathered and compiled the data. The index is found in developed
markets (such as the ISM’s in the US), larger emerging markets such as China, India
and Brazil, and a few other frontiers. It is based upon manufacturers’
responses to set questions on core variables in their businesses. In our case,
it is not seasonally adjusted.
PMIs are forward-looking indicators of sentiment
in all economies, and have the proven capacity to move financial markets in
developed economies. To reinforce the point, the latest national accounts cover
the third quarter (July-September) and the latest PMI the first month of the
first quarter of the new year.
In the unweighted model of
our choice (the ISM’s), respondents are asked whether output, employment,
new orders, suppliers’ delivery times and stocks of purchases have improved on
the previous month, are unchanged or have declined. A headline reading of 50 is
neutral. We have posted nine negative readings since our launch in April 2013,
the latest in January 2017.
Our sample is an accurate
blend of large, medium-sized and small companies.
We have added “trigger”
questions, which apply when the respondent has the same answer on a sub-index
for two months and then changes it for the third. Two particularly interesting
comments this time are references to the fuel scarcity and the non-payment of
salaries.
All five sub-indices
declined in December, four of them by more than ten points. That for employment
moved into negative territory.
The headline in January
has posted a monthly fall every year since our launch. We cautioned one month
ago that such a fall was expected. The holiday season has ended, and with it
the temporary boost to consumer demand.
The headline reading has
been above 50 since March. The principal driver has been the CBN’s use of
multiple fx windows, which has transformed liquidity. Manufacturers, or indeed
any users of fx, now have reliable access to fx provided that they are
comfortable with the price. This is evident from the PMIs but also inflation
data and listed company results.
Manufacturing expanded by
2.6% q/q in Q3 2017. The two largest sub-sectors are food, beverages and
tobacco, and textiles, apparel and footwear, which posted growth of 0.6% and
7.5% respectively.
Related
News
1. Manufacturing PMI Stands at 59.3%
in December 2017 from 55.9% in November 2017
2. PMI Reading No 57: A Seasonal Surge
3. Nigeria PMI - Economic Expansion Strengthens In
November
4. PMI Reading No 56: Nine Months Above Water
5. Manufacturing PMI Stands at 55.9% in November 2017
from 55.0% in October 2017
6. PMI Reading No 55: Higher and Higher
7. Nigeria PMI- Record Manufacturing Reading in
September
8. PMI Reading No 54: A Pause for Breath
9. Manufacturing PMI Stands at 55.3% in September 2017
from 53.6%% in August 2017 - CBN
10. PMI Reading No 52: A Fifth Month Above
Water