PMI records growth for the first time since May

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By Kayode Tokede

The manufacturing Purchasing Managers’ Index (PMI) recorded growth in November 2020 after six months of contraction between May and October 2020.

This is contained in the Central Bank of Nigeria (CBN) Purchasing Managers’ Index (PMI) survey report released on Wednesday.

According to the report, the manufacturing PMI rose to 50.2 index points while PMI for the non-manufacturing sector stood at 47.6 points in November 2020, indicating a slow contraction in non-manufacturing activities.

The eight subsectors that reported an expansion (above 50 percent) are transportation equipment; non-metallic mineral products; furniture & related products; cement; textile, apparel, leather & footwear; plastics & rubber products; food, beverage & tobacco products; and printing & related support activities.

The remaining six subsectors that reported a contraction are electrical equipment; petroleum & coal products; chemical & pharmaceutical products; primary metal; paper products; and fabricated metal products.

Production level index for the manufacturing sector in November 2020 stood at 51.7 points, also indicating recovery from the contraction recorded since May 2020.

According to the report, seven out of the 14 subsectors production levels recorded expansion, three subsectors reported stationary levels of production, while four subsectors still recorded contraction in production level.

Meanwhile, in the non-manufacturing sector, three out of the 17 surveyed subsectors reported growth (transportation & warehousing; healthcare & social assistance; agriculture), while 13 subsectors reported a decline.

Business activity in the non-manufacturing sector showed recovery from contraction with 50.5 points for the first time since May 2020.

“Eight out of the 17 subsectors reported expansion in business activity (above 50% threshold), three subsectors reported stationary level of business activities, while six subsectors recorded contraction in business activity in November 2020,” the report read.

The report further showed that the employment level both for the manufacturing sector (47.3 points) and non-manufacturing sector (46.7 points) in November 2020 indicated contraction for the 8th consecutive month.

Respondents were asked what would become of the Nigerian economy if prices started to rise faster than they do now. The survey result showed that 62.1 per cent of the respondents believed that the economy would end up weaker, 9.0 per cent stated that it would be stronger, 12.6 per cent of the respondents believed it would make a little difference, while 16.4 per cent did not know.

The responses showed considerable support for price stability, as majority (62.1 per cent) agreed that the economy will end up weaker.

This is consistent with the notion that inflation constrains economic growth. When asked how prices have changed over the past 12 months, respondents gave a median answer of 5.3 per cent. Of the total respondents, 3.5 per cent thought prices had gone down or not changed, 73.7 per cent felt that prices had risen by at least 3.0 per cent, while 21.5 per cent felt that prices inched up by more than 1.0 per cent, but less than 3.0 per cent.