Manufacturing Index of CBN drops to 56.2 index points in Sept

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By Kayode Tokede

The Central Bank of Nigeria (CBN) has disclosed that its Purchasing Mangers’ Index (PMI) in the month of September stood at 56.2 index points from 57.1index points reported in August 2018.

The CBN in its PMI survey on Tuesday said there was expansion in the manufacturing sector for the 18 consecutive month.

According to CBN report, the PMI however grew at a slower rate when compared to the index in the previous month.

The report noted that, “Of the 14 subsectors surveyed, 10 reported growth in the review month in the following order: Electrical equipment; Printing & related support activities; Transportation equipment; Nonmetallic mineral products; Chemical & pharmaceutical products; Fabricated metal products; Furniture & related products; Textile, apparel, leather & footwear; Food, beverage & tobacco products; and Plastics & rubber products.

“The Petroleum & coal products; Cement; Paper products; and Primary metal subsectors declined in the review month.”

The report stated that at 58.4 points, the production level index for the manufacturing sector grew for the 19th consecutive month in September 2018.

The report disclosed that, “The index indicated a slower growth in the current month, when compared to its level in the preceding month. 10 of the 14 manufacturing subsectors recorded increase in production level, one remained unchanged while three declined.

“At 55.3 points, the new orders index grew for the eighteenth consecutive month, indicating increase in new orders in September 2018. Nine subsectors reported growth, two remained unchanged, while three contracted in the review month.

“The manufacturing supplier delivery time index stood at 56.1 points in September 2018, indicating faster supplier delivery time for the sixteenth consecutive month. 11 subsectors recorded improved suppliers’ delivery time, two remained unchanged while one reported worsening delivery times

“The employment level index in September 2018 stood at 54.9 points, indicating growth in employment level for the 17th consecutive month. Of the 14 subsectors, 12 reported increased employment level, one remained unchanged while one reported reduced employment level in the review month.

“The Manufacturing sector inventories index grew for the eighteenth consecutive month in September 2018.

“At 55.9 points, the index grew at a slower rate when compared to its level in the previous month. 10 of the 14 subsectors recorded growth, while four recorded decline in raw material inventories

Analysts at Cordros Capital in a report said, “The report shows manufacturing and non-manufacturing indices at 56.2 and 56.5 point respectively, suggesting sustained healthy business conditions.

“Though still well ahead of the 50.0 expansion mark, both indices expanded at a slow pace for the period when compared to last month’s reading of 57.1 and 58.0 respectively.

“Nonetheless, the Q3-2018 PMI averages of 56.7 and 57.4 (Q2-2018: 56.8 and 57.4 index point), largely underscore our positive growth expectation for both manufacturing and service Gross Domestic Product (GDP) over the third quarter.

“To our mind, even as headline inflation resumed uptick in August (+ nine basis points to 11.23 per cent), we believe foreign exchange stability and liquidity continues to support activities across manufacturing and non-manufacturing space.

“Again, we reiterate that PMI is not always a seamless and consistent guide to economic performance. However, a sustained expansionary reading provides some support to our positive Q3-2018 GDP expectation. For evidence, Manufacturing, Service, and Agriculture contribute 9.3per cent, 37.5per cent and 22.9per cent to GDP respectively, and strong readings over Q3-2018 suggest continued non-oil led GDP growth. In addition, the currency outlook remains strong, with rising oil prices (September: +9.1per cent m/m to $84.92) and improving domestic production (+4.5% m/m to 1.73 mbpd) suggesting the CBN will continue to support the market to keep rates at around current levels.”

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