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Raw materials index drives manufacturing PMI 59.3 points expansion

Godwin Emefiele

The Purchasing Manager’s Index (PMI) of the manufacturing sector expanded by 59.3 points in November from 58.2 index points in the preceding month, driven by raw materials inventory.

The Central Bank of Nigeria (CBN) on Wednesday released the PMI report which showed that production level, new orders, supplier delivery time, employment level and raw materials inventories grew at a faster rate in November 2019.

The raw materials/WIP inventory of the sector grew for the 32nd consecutive month in November 2019 to 60.6 points, as the index grew at a faster rate when compared to its level of 58.6 points in October 2019.

The manufacturing PMI expanded for the 32nd consecutive months. The report revealed that 13 out of the 14 surveyed subsectors reported growth in the review month. These include transportation equipment; petroleum and coal products; furniture and related products; electrical equipment; plastics and rubber products; food, beverage and tobacco products; non-metallic mineral products; printing and related support activities; cement; fabricated metal products; primary metal; chemical and pharmaceutical products; and textile, apparel, leather and footwear. The paper products subsector recorded decline in the review period.

Interestingly, the manufacturing sector was favoured in the banks’ credit to private sector as the sector received N459.69 billion, the highest in two decades.

Godwin Emefiele, governor of the CBN, said on Tuesday that growth in credit to the private sector, improved to 13.08 per cent in October 2019 from 12.49 per cent in the previous month, reflecting the impact of the Bank’s recent policy on loan-to-deposit ratio. An increase in absolute gross credit, amounting to N1.2 trillion, was recorded between end-May and end-October 2019.

Read also: Fixing manufacturing value chain through fiscal, monetary policies

 Production level index for manufacturing sector grew for the 33rd consecutive month to 60.1 index points in November 2019. The index indicated a faster growth in the current month, when compared to its level 59.3 points in October 2019.

 The composite PMI for the non-manufacturing sector stood at 60.1 points in November 2019, indicating expansion in Non-manufacturing PMI for the t31 consecutive month. The index grew at a faster rate when compared to its level of 58.2 points in October 2019. All 17 surveyed subsectors recorded growth in the review month.

 At 60.7 points, new orders index grew for the thirty-second consecutive month in November 2019. Twelve of the 17 surveyed subsectors recorded growth in new orders, 4 remained unchanged, while one recorded decline during the review period.

The Manufacturing and Non-Manufacturing PMI Report on businesses is based on survey responses, indicating the changes in the level of business activities in the current month compared with the preceding month.

A composite PMI above 50 points indicates that the manufacturing/non-manufacturing economy is generally expanding, 50 points indicates no change and below 50 points indicates that it is generally contracting. The subsectors reporting growth are listed in the order of highest to lowest growth, while those reporting contraction are listed in the order of the highest to the lowest contraction.