Nigeria’s Purchasing Manager Index surges to 52.9

The PMI is an aggregated indicator which shows the economic health of the country’s manufacturing sector. A composite PMI points above 50 is considered expanding while one below it is noted as declining.

Central Bank Governor Godwin Emefiele speaks on the conclusion of the monthly Monetary Policy Committee meeting in Abuja, Nigeria.

The report which was released on Sunday, July 2, 2017, estimated the PMI at 52.9 points, which indicates an expansion for the third consecutive month in the year.

The PMI is an aggregated indicator which shows the economic health of the country’s manufacturing sector.

The index is based on an assessment of five indicators: new orders, inventory levels, production, supplier deliveries, and the employment environment, by players in the manufacturing sector.

A composite PMI points above 50 is considered expanding while one below is noted as declining.

Further analysis of the report showed that 12 out of the 16 sub-sectors experienced growth in the month under review. Some of the sub-sector include 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.

The four declining sub-sectors are non-metallic mineral products, cement, chemical & pharmaceutical products, and printing & related support activities.

On the performance of component indicators of the index, the production level in the manufacturing sector increased within the month, but a slower rate than previous months. The overall index for this indicator was estimated at 58.5 points.

Other indicators such as new orders index grew to 51.0 points, supplier delivery time increased to 50.3 points and the employment level index pointed to the fact that more jobs were created by the sector in June. It also stood at 51.1 points.

Speaking this development and its implication for the Nigerian economy, Mr Suleiman Barau, CBN’s Deputy Governor, Corporate Services noted that there is a need to provide necessary support towards improving the performance of the growth-induced sectors.

He stated that this support can best be done by the commercial banks.

“The central bank, under its developmental mandate, has put in place a number of credit initiatives to support the recovery process but it needs to be borne in mind that the task of channelling financial resources to the private sector lies primarily with the commercial banks,” the CBN deputy governor said.

Mr Adebayo Adelabu, the Deputy Governor, Operations of the CBN also stated that it was becoming clearer that inward looking economic strategies could become the preferred global framework.

“For Nigeria, the balance of payment account witnessed considerable challenges from mid-2014 to the end of first half of 2016. The improvement in the latter half of 2016 resulted mainly from a drastic reduction in imports, which initially was due to foreign exchange constraints but later due to the substitution of some imported items with domestically produced ones."

“Viewed within this prism, emerging economies such as Nigeria should start re-examining their economic model to avoid being caught napping. It is commendable that the country has recorded significant milestones in rice production such that it has taken over imported rice within a space of two years."

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