Monday, November 02,
2020 / 09:23 AM / by FBNQuest Research / Header Image Credit: FBNQuest
Our manufacturing Purchasing Managers' Index (PMI), the first of its genre in Nigeria, slipped from 54.8 to 51.3 in
October. Our partner, NOI Polls, has gathered the data. The index can be found
in advanced economies such as the ISM's in the US, larger EMs like China, India
and Russia, and some other frontier markets. It is based upon manufacturers' responses to set questions on core variables in their businesses. In our case,
it is not seasonally adjusted. Our highest reading was 68.7 in December 2017
and our lowest 43.3 during selective lockdown in May this year.
In our unweighted model (that of the Institute for
Supply Management), respondents are asked whether output, employment, new
orders, suppliers' delivery times and stocks of purchases have increased over
the previous month, are unchanged or have declined. A headline reading of 50
(ex 100) is neutral, and anything higher points to expansion in the sector.
PMIs, unlike the national accounts, are
forward-looking indicators with a proven record of moving financial markets.
There have been some very large monthly swings this year due to Covid-19.
The official index in China soared from a record low
of 35.7 in February due to lockdown to 52.0 in March on its lifting. Our
own index recorded a ten-point move in June to 53.9 as Nigeria exited its own
lockdown. It has since moved within a narrow range.
In Nigeria we should remember that manufacturing
produces for the domestic market and so is little affected by the collapse in
external demand. Also, it is dominated by consumer goods firms, many of which
produce core elements in the household shopping basket.
drivers behind the decline in the headline in October were, of course, the
protests in major Nigerian cities and the related blockage of roads, not
forgetting the curfews and other restrictions imposed in response. This emerged
from our trigger questions: these arise when a respondent has the same answer
on a sub-index for two months and changes it for the third.
Not many firms are moving the dial. The most popular
response is 'no change', which accounted for at least 60% of answers in
all five cases in October and over 80% for two sub-indices (employment and
delivery times). Looking ahead, we expect the index to bump along within the
present range above water. Household demand has been squeezed since early 2015
(i.e before the last recession), and we see little improvement before 2023 at
On a 12-month moving average basis, the headline index
slipped marginally from 52.1 to 51.8 in October.
China's official manufacturing PMI eased fractionally
to 51.4 in October.
Reading No 90: A Welcome Step Forward
Reading No 89: Marginal Slip, Still Positive
PMI Reading No
88: Weaker Yet Above Water
4. PMI Reading No
87: Back in Positive Territory
PMI Still Weak
Reading No 86: A New Low for the Headline
PMI Stands at 41.1% in June 2020 from 42.4% in May 2020
Reading No 85: Damage From the Lockdown
Reading No 84: Fall on Global Headwinds
PMI Stands at 51.1% in March 2020 from 58.3% in February 2020
PMI Reading No
81: Well Above Water
PMI Stands at 60.8% in December 2019 from 59.3% in November 2019
Reading No 80: A Seasonal Boost
PMI Stands at 59.3% in November 2019 from 58.2% in October 2019
PMI Stands at 58.2% in October 2019 from 57.7% in September 2019
PMI Stands at 57.7% in September 2019 from 57.9% in August 2019
PMI Stands at 57.9% in August 2019 from 57.6% in July 2019
Reading No 76: Again Below Water
PMI Stands at 57.4% in June 2019 from 57.8% in May 2019
20. PMI Reading No
73: In The Comfort Zone
PMI Reading No
71: Election-driven Drift
22. PMI Reading No
70: A Seasonal Slump
23. PMI Reading No
69: Well Above Water