Nigeria economy continues recovery as manufacturing index expands third month in a row
The Manufacturing Purchasing Managers’ Index (PMI) increased to 52.9 index points in June 2017, indicating expansion in the manufacturing sector for the third consecutive month. The Central Bank of Nigeria (CBN) revealed this in its PMI report for June 2017.
The PMI expansion reflected the prediction that the economy would likely come out of recession this year.
Godwin Emefiele, governor of the country’s central bank and Adeyemi Dipeolu, special adviser to the president on economic matters, recently assured Nigerians that the country would exit the biting economic recession sooner rather than later, stating that decelerating inflation and negative gross domestic product (GDP) growth, as well as increased capacity utilisation and agriculture output were all signs that the economy was on the path to recovery.
Nigeria’s first quarter 2017 GDP report released by the National Bureau of Statistics had contracted by 0.52 per cent (year-on-year) in real terms, indicating five consecutive quarters of contractions since Q1 2016. This was 0.15 per cent higher than the rate recorded in the corresponding quarter of 2016 (revised to –0.67 per cent from –0.36 per cent) and higher by 1.21 percentage points from the rate recorded in the preceding quarter (revised to –1.73 per cent from –1.30 per cent).
The PMI is an indicator of the economic health of the manufacturing sector.
The latest PMI report shows 12 of the 16 sub-sectors reporting growth in the review month in the following order: computer & electronic products; paper products; plastics & rubber products; primary metal; transportation equipment; petroleum & coal products; appliances & components; textile, apparel, leather & footwear; furniture & related products; electrical equipment; food, beverage & tobacco products and fabricated metal products.
But the remaining four sub-sectors declined in this order: non-metallic mineral products; cement; chemical & pharmaceutical products and printing & related support activities.
On the other hand, the production level index for manufacturing sector grew for the fourth consecutive month in June 2017. The index at 58.2 points indicated an increase in production but at a slower rate, when compared to the level attained in the previous month.
Fourteen manufacturing sub-sectors recorded increase in production level during the review month in the following order: computer & electronic products; plastics & rubber products; transportation equipment; primary metal; appliances & components; paper products; textile, apparel, leather & footwear; electrical equipment; petroleum & coal products; fabricated metal products; furniture & related products; food, beverage & tobacco products; cement and printing & related support activities.
The non-metallic mineral products and chemical & pharmaceutical products sub-sectors recorded decline in production.
Similarly, the new orders index grew for the third consecutive month. In the same vein, eight sub-sectors reported growth in new orders in the following order: paper products; primary metal; plastics & rubber products; computer & electronic products; petroleum & coal products; furniture & related products; textile, apparel, leather & footwear and food, beverage & tobacco products.
By Donatus Eleko