• Thursday, March 28, 2024
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PMI forecasts respite for businesses as festive season nears

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Nigeria’s manufacturing Purchasing Managers’ Index (PMI), a gauge for manufacturing sentiments, expanded to 57.4 points in November from the 49.6 points recorded in October, according to data by FBN Quest and NOI.

This optimal performance rides on the increased economic and commercial activity associated with the festive season as it nears.

“The increase in the headline PMI posted last month was mirrored across all five sub-indices as the bustle around the festive season eclipsed -end demand,” the report stated.

This figure is also the highest recorded since the beginning of the year, as the index experienced a pendulum-like movement. Generally, a PMI figure above 50 points indicates that the manufacturing economy is generally expanding, 50 points is the benchmark and below 50 points indicates poor business performance.

Analyst at FBN quest also note that businesses will enjoy a small seasonal boost in December owing to the festive season as demand for products and services increase significantly in line with annual trends

Manufacturers are already taking strategic positions to effectively utilize the festive season as a quick relief for slow business activities in the course of the year.

A seasoning and spice manufacturer who pleaded anonymity said that his company has increased its production capacity as the festive season nears, noting that increased demand for the products is expected.

Read also: PMI back below water as FX shortages, rising production costs bite

“People will start shopping from the second week of December and we have prepared ahead for that, other than the increase in demand, there will be an increase in prices of products which consumers will adapt to as precedence has shown from previous years,” he said.

While malls and shopping centres like Shoprite, Spar et cetera engage in discount prices for their customers during the festive season, prices of consumer goods ranging from foodstuff to cooking gas, beverages, etc. in the local market hikes.

He added that this is also the time to introduce more affordable alternatives to well-known brands as consumers shift loyalty based on their purchasing power.

Amusan Adijat, who sells rice, edible oils, and frozen food at Daleko market said that the prices of her goods will increase by the second week of December as it is the trend, however, by the New Year, the prices will revert to normal or might even be lesser.

Now producers are pressured to supply more and they tend to increase their charges coupled with the federal government restriction on some imported products, customers will buy it grudgingly because they have no choice,” she said.

As a leading indicator of how the economy fared within a period, analysts project that the PMI performance will drive expansion in the GDP performance of Q4 2021.

“We have seen an improvement in the PMI compared to the previous quarter, so our expectation of the GDP is that it should be an improvement as well,” Yinka Ademuwagun, Investment & research analyst told BusinessDay.