CBN’s Nigeria PMI – Third Consecutive Month of Decline

Proshare

Tuesday, April 05, 2016 3:12 PM / Cordros Capital

Highlights:

·         Manufacturing and Non-Manufacturing PMI stuck below 50 for the third straight month this year

·         March data points to moderate improvement in business conditions relative to February

·         Average PMI of 46 in Q1-2016 points to a first quarter GDP growth that would likely fall in line with the disappointing levels of 2015 quarterly growth

·      Corroborating this view, the IMF (in its 2016 Article IV Consultation with Nigeria) last week, revised its 2016 growth estimate for the country down to 2.3%, from 4.1% projected at the beginning of the year 

Last week, the Central Bank of Nigeria (CBN) released its Purchasing Managers' Index (PMI) Report for March 2016. As usual, the report captures PMI for both manufacturing and non-manufacturing sectors. Although the March data pointed to a moderate improvement in business conditions relative to February (manufacturing: 45.9 and non-manufacturing: 45.4, from their respective 45.5 and 44.3 in February), the reading remained below the 50 point expansion threshold. The latest data further underscores the fact that economic activities are yet to materially pick up from the slow start to the year.  

Notably, the average  manufacturing and non-manufacturing PMIs of 46.2 and 45.5 respectively in Q1-2016 (the lowest in the 15-month period within which the CBN's PMI data is available) point to a first quarter GDP growth that would likely fall in line with the disappointing levels of 2015 quarterly growth. 

The data suggests a fundamental readjustment of growth expectations this year, and corroborating this view, the IMF (in its 2016 Article IV Consultation with Nigeria) last week, revised its 2016 growth estimate for the country down to 2.3%, from 4.1% projected at the beginning of the year. 

The hope that budget would be passed early this month was dampened after the President hinted that he needed to review the appropriation bill, citing possibilities of discrepancies between the details of the Bill submitted by the Presidency and those approved by the national assembly. With the latter having sought two weeks (one week from this week) to work on, and present the detailed Bill, in which case executive assent might be delayed till end of April, we would expect the economy to remain "the sacrificial lamb".  

The ongoing executive-legislative bickering (despite majority of the legislators belonging to the ruling party) over the budget is common in this clime and comes as no surprise. This, alongside the MPC's technical switch to monetary policy tightening cycle, would continue to subdue manufacturers' expectations of the economy.  

Download the PMI Report here

Related News

1.       PMI reading no 36: a welcome recovery

2.      PMI February 2016; Higher stocks, higher output

3.      PMI reading no 35 is just above neutral

4.      January 2016 Purchasing Managers’ Index is worst reading to date, fx the culprit

5.      Purchasing Managers’ Index reading no 34 is below water, fx to blame

6.      PMI reading no 33: healthy and flattish – Jan 04, 2016

7.      December 2015 PMI is well above water for now – Jan 04, 2016

8.     November 2015; Comfortably above water – Dec 01, 2015

9.      PMI reading no 32: Still above water – Dec 01, 2015

10.  PMI reading no 31: a modest pick-up – Nov 02, 2015

11.   PMI reading no 30: Just above the water – Oct 02, 2015

12.  PMI reading no 29: another sign of the times – Sep 01, 2015

13.  August 2015; return to negative territory – Sep 01, 2015

14.  PMI reading no 28: decline in the macro headwinds – Aug 03, 2015

15.   PMI reading no 27: more robust across the board – Jul 01, 2015

16.  July 2015; Back in positive territory – Jul 01, 2015

17.   PMI reading no 26: below water – Jun 01, 2015

18.  PMI reading no 25: good workforce reading – May 04, 2015

19.  April 2015; Comfortably above water – May 04, 2015

 

 

READ MORE:
Related News
SCROLL TO TOP