Our manufacturing Purchasing Managers’ Index (PMI), the first in Nigeria, picked up in November from 56.5 to 58.9. 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. This latest report covers the second month of the fourth quarter while we are waiting for the Q3 national accounts.
- 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 rose for three of the five.
- The employment readings have been the weakest of the five since the economy started to contract in Q1 2016. Firms may raise their production and even see a pick-up in new orders but are wary of adding to the payroll. In this latest report output reached 64 and new orders 60 while employment lagged at 51.5.
- The national accounts for Q2 2018 show that manufacturing growth slowed to 0.7% y/y from 3.4% the previous quarter. 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 for the firmer readings in this report are the approach of the holiday season and the dry weather.
- The annual trend since our launch has been a robust reading in December, followed by a steep decline in January. We expect the same this year as well as a decent pick-up in manufacturing growth in Q3 and Q4 2018.
