Omodele Adigun
Despite reflecting slowed growth in both manufacturing and non-manufacturing segments, expert has hailed the January Purchasing Managers’ Index (PMI) Report, recently released by the Central Bank of Nigeria (CBN).
According to Mr. Peter Moses of Cordross Capital, the January 2018 PMI figures show a good start to the year.
He added: “We believe the composite PMI will remain strong through 2018 as it suggests business activities kicked off the year on a positive note, and signals sustained expansion in output growth”.
Recall that CBN released its PMI report for the month of January last week, which showed that manufacturing and non-manufacturing activities remained healthy during the month, posting expansions of 57.3 and 58.5 respectively.
“Whilst acknowledging that both manufacturing and non-manufacturing PMIs expanded at a slower rate (relative to December, which is always flattered by seasonality) during the review period, we reiterate that the survey result continues to show that business owners and manufacturers are more optimistic about the prospects of the broader economy than a year ago. For insight, compared to January 2017, both manufacturing and non-manufacturing PMIs have improved (from contractions of 48.2 and 49.4 respectively) by 910 bps apiece. Plus, the latest data show the highest year start indices for both PMIs within the scope of available data from the CBN. As a leading indicator, January 2018 composite PMI suggests business activities kicked off the year on a positive note, and signals sustained expansion in output growth,”
Moses said in an e-mail note.
He stated further that the continued strengthening in the survey result is consistent with notable positives in the overall economy, including “the apex bank’s sustained commitment to forex stability, which has helped narrow the spread between the official and parallel segments of the currency market rates. Two, broadly positive expectation of output growth in the fourth quarter of the year, and indeed 2018; improving inflationary conditions, with headline inflation rate moderating to 15.37 per cent in December (from 15.90 per cent in November), and lastly the rallying crude oil prices,” he added.
The CBN report states that the manufacturing PMI kicked off the year on a positive note, expanding to 57.3 (highest year start since available data) in the review period, from a record-high 59.3 in December. The slower pace of expansion in the manufacturing segment is attributable to slowed growth in the major sub-indices that make up the manufacturing PMI production level (59.6, previously 63.2), new orders (58.3, previously 60.0), supplier delivery time (56.8, previously 57.4), employment level (53.3, previously 53.9), and WIP inventory (57.7, previously 61.1). The sustained stability of the naira exchange rate, coupled with the widely positive outlook for the currency, remains a major driver of the sustained expansion in the composite manufacturing PMI.
Of the 16 subsectors, 13 reported growth in the review month in the following order: computer & electronic products; nonmetallic mineral products; cement; textile, apparel, leather & footwear; printing & related support activities; appliances & components; primary metal; petroleum & coal products; food, beverage & tobacco products; furniture & related products; paper products; fabricated metal products; plastics & rubber products. The electrical equipment; chemical & pharmaceutical products; and transportation equipment subsectors contracted in the review month.