Tuesday, January 02, 2018 /09:03AM / FBNQuest Research
Purchasing Managers’ Index (PMI), the first in Nigeria, rose strongly in
December to 68.7 from 60.1. Our partner, NOI Polls, has gathered and compiled
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.
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 third month of the fourth.
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.
sample is an accurate blend of large, medium-sized and small companies.
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.
five sub-indices rose in December: the highest was 73 (stocks of purchases).
The headline reading has been above 50 since March.
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.
positive impact has gained momentum since July. Weekly turnover on the
investors’ and exporters’ fx window (NAFEX) has risen to about US$1bn. A more
recent boost in both October and December has been the seasonal rise in demand
for the year-end celebrations. The readings in December have been particularly
strong although we should caution that a similar surge the previous year was
followed by a sharp fall in January 2017.
expanded by 2.6% q/q in Q3 2017. We can see the momentum of the improved fx
availability in the growth of the two largest sub-sectors: food, beverages and
tobacco (0.6%), and textiles, apparel and footwear (7.5%).