PMI reading no 65: positive once more

Our manufacturing Purchasing Managers’ Index (PMI), the first in Nigeria, picked up strongly in August from 48.9 to 54.8. Our partner, NOI Polls, has gathered and compiled the data. The index is found in developed markets (such as the ISM’s in the US), larger emerging markets such as China, India and Brazil, and a few frontiers. It is based upon manufacturers’ responses to set questions on core variables in their businesses. In our case, it is not seasonally adjusted.


  • PMIs, unlike the national accounts, are forward-looking indicators of sentiment, and traditionally released on the first working day of the new month. They can move financial markets in developed economies.

  • In the unweighted model of our choice (the ISM’s), respondents are asked whether output, employment, new orders, suppliers’ delivery times and stocks of purchases have improved on the previous month, are unchanged or have declined. A headline reading of 50 is neutral. We have now posted twelve negative readings since our launch in April 2013 including three this year.

  • Our sample is an accurate blend of large, medium-sized and small companies, based across the country.

  • All five sub-indices improved, and all ended in positive territory. The proportion of unchanged responses declined for four of the five sub-indices.

  • The national accounts for Q2 2018 show that manufacturing growth slowed to 0.7% y/y from 3.4% the previous quarter. The growth of its largest segment (food, beverages and tobacco) slowed to 1.2% y/y from 5.5%. Among its larger segments, the best performer was cement (3.8% y/y), which we attribute to public infrastructure spending, real and anticipated.

  • The exercise includes questions triggered when a respondent has given the same answer for a sub-index for two successive quarters and then changes it for the third. The most common explanations in this report are the approach of the dry season, and improved demand and access to raw materials.

  • We must, therefore, view the national accounts for Q2 as historic and see a possible turning point after three successive headline readings under water. The recovery has been led by medium-sized firms (with 50 to 200 employees).

  • Fx has been freely available for more than one year but a reading of 59.5 for new orders, the highest since December, tells us that respondents, led by the medium-sized operations, are enjoying a boost in demand.

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