PMI reading no 66: still in comfort zone

Our manufacturing Purchasing Managers’ Index (PMI), the first in Nigeria, eased in September to 53.7 from 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.

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

  • Two sub-indices improved. All sub-indices ended in positive territory. The proportion of unchanged responses increased for all five sub-indices.

  • 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. From the trigger questions, cumbersome bureaucratic processes slowed clearance procedures of imported raw materials which had an adverse effect on the delivery times sub-index.

  • The employment sub-index was unchanged at 51.5. Respondents reporting no change remained high. In our view, most manufacturers are not sufficiently confident of future demand to increase their workforce.

  • 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%.

  • The manufacturing sector continues to enjoy the benefits of the CBN’s exchange-rate reforms since greater fx availability translates directly into increased access to imported inputs. However, demand remains soft.  Although, there was a pickup in output, we note that reduced cash circulation had a negative impact on sales.

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