CBN’s manufacturing PMI records fourth consecutive growth
Nigeria may soon exit recession
The Central Bank of Nigeria (CBN) yesterday said Nigeria’s manufacturing sector has recorded expansion in production activities for four consecutive times in its Purchasing Managers’ Index (PMI).
The implication of this positive outcome which also confirms last quarter’s GDP growth recovery as well as last month’s inflation moderation are signs that the Nigerian economy may soon exit recession and return to the path of growth.
The PMI assesses the level of activities in both the manufacturing and non-manufacturing sectors of the economy.Yesterday’s PMI report, according to the CBN indicated that the Nigerian manufacturing sector scored 54.1 per cent. A composite PMI above 50 points indicates that the manufacturing/non-manufacturing economy is generally expanding, 50 points indicates no change and below 50 points indicates that it is generally contracting.
The sub-sectors reporting growth are listed in the order of highest to lowest growth. For the reporting contraction/decline, they are listed in the order of the highest to the lowest decline.
According to the report: “ The Manufacturing PMI stood at 54.1 index points in July 2017, indicating expansion in the manufacturing sector for the fourth consecutive month.”
It stated that eleven of the 16 sub-sectors reported growth in the review month in the following order: Appliances and components; computer and electronic products; cement; primary metal; chemical and pharmaceutical products; food, beverage and tobacco products; textile, apparel, leather and footwear; printing and related support activities; paper products; electrical equipment and transportation equipment.
However, it reported that the remaining five sub-sectors declined in the following order: Petroleum and coal products; fabricated metal products; furniture and related products; non-metallic mineral products and plastics and rubber products.
The manufacturing and non-manufacturing PMI report on businesses is based on data compiled from purchasing and supply executives’ responses.Survey responses indicate whether there is change or no change in the level of business activities in the current month compared with the previous month.
For each of the indicators measured, the report shows the diffusion index of the responses.The diffusion index is computed as the percentage of positive responses plus one-half of the percentage of those reporting no change.
The composite PMI is then computed as the weighted average of five diffusion indices for manufacturing sector: production level, new orders, supplier delivery time, employment level and raw materials inventory, with assigned weights of 25 per cent, 30 per cent, 15 per cent, 10 per cent, and 20 per cent respectively. The composite PMI for non-manufacturing sector is computed from four diffusion indices: Business activity, new orders, employment level and raw materials.