PMI reading no 72: boost after the elections

Our manufacturing Purchasing Managers’ Index (PMI), the first in Nigeria, picked up strongly in March from 50.4 to 56.9. 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. According to international best practice, they should be released on the first working day of the new month.

  • 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 posted twelve negative readings since our launch in April 2013, the most recent in July 2018.

  • Our sample is a representative blend of large, medium-sized and small companies, based across the country. Four sub-indices improved in March, and all closed in positive territory.

  • As our index declined in February on the basis of uncertainty related to the elections, which was particularly marked in the output sub-index, it has recovered in March now that the polls have been completed.

  • As we approach Buhari Two, we see that manufacturers have a familiar wish-list of requests for action from the government. Alongside inadequate power supplies, large-scale smuggling and logjams at the two principal ports, the cost and availability of credit feature high on the list. Data from the Manufacturers Association of Nigeria show that the average cost of credit for its members was 22.9% in H1 2018.

  • Private consumption demand remains soft. Household budgets have to be rebuilt: the new minimum wage, whenever implemented, will help the process.

  • Answers to our trigger questions show respondents’ relief that the elections have been concluded, with a rise in new orders explaining the surge in the output sub-index.

  • On a 12-month moving average basis, in the last year, the headline reading peaked at 58.0 in April 2018 and has since weakened each month to the current 53.5.

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