• Tuesday, June 25, 2024
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BusinessDay

Manufacturers’ confidence in Nigeria’s economy rises for first time since 2022

Confidence among chief executive officers of major firms rose for the first time since the third quarter of 2022 on diesel price easing expectations and naira appreciation in April.

The Manufacturer Association of Nigeria (MAN) CEOs Confidence Index (MCCI) increased by 1.7 points to 53.5 points in the first quarter of 2024 from 51.8 points in the fourth quarter of 2023, according to MAN’s first quarter survey released Thursday.

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Reading above 50 points indicates the expectation for economic expansion, while an index score of less than 50 suggests deterioration in the operating environment.

According to the MCCI, major performance indicators of the manufacturing sector all recorded favourable changes.

“All standard diffusion factors increased due to the positive effect of selective reforms and the constant appreciation of the naira in the greater part of last month of the quarter by about 22 percent and 28 percent in the official and parallel market respectively,” MAN said in the report.

“This moderately reduced the cost of imported raw materials and machinery as well as the import duty payments during the later part of the quarter,” it stated.

It added that the expectation of easing diesel prices also contributed to the improved perception of manufacturers during the quarter as diesel cost accounts for 48 percent of their expenditure on alternative energy.

According to the report, the current business condition rose to 46.2 points in the first quarter of 2024 from 44.7 points in the fourth quarter of 2023, while business condition expectation for the third quarter is projected to increase to 59.2 points.

In terms of employment, it stated that the current condition improved from 45.9 points in the fourth quarter of 2023 to 47.5 points in the first quarter of 2024, while it is projected to improve to 51.2 points in the next quarter.

Also, the production level forecast is expected to move upward from a confidence level of 60.1 points to 63.5 points, the report added.

“A cursory observation reveals that indices of Current Business Condition and the Current Employment Condition remained below the 50-point threshold,” it said.

“This was due to the lingering effect of rising inflation, escalated energy prices, exchange instability and unstable Customs duty rate, especially in January and February,” it added.

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Across the sectoral groups, the reports showed that eight of the 10 sectoral groups recorded confidence levels above the 50-point threshold. However, the electrical and electronics sectoral group dipped from 56.9 points in the fourth quarter of 2023 to 53.3 points in the first quarter of 2024.

Also, the report shows that the chemical & pharmaceutical and motor vehicle & miscellanies assembly sectors recorded confidence indices below the threshold at 49 and 42.5 points respectively.

In industrial zones, Kwara/Kogi (62), Edo/Delta (61.6), Apapa (60.6), Ogun (60), Kaduna (58), Imo/Abia (57.7), Ikeja (56.3), Abuja(53) and Anambra/Enugu (52.3) industrial zones recorded index scores above the 50-point standard in the quarter under review.

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