The Nigerian economy is in turmoil and businesses are expected to record revenue declines and losses when they declare their results in the next few weeks. One of the key indicators in determining which businesses is experiencing financial difficulty is looking at their inventory. Companies make money when they sell products and services and for those who have inventory pile ups, it is a sign that sales will decline. Recording an increase in orders is evidently a sure sign that businesses are attracting the right customers and recording growth.
The CBN’s monthly Purchasing Managers Index (PMI) is a report that tracks the activities in both the manufacturing and services sector. The index tracks New orders, business activity, production levels, supply delivery time, employment, supply delivery time etc. Here is an excerpt of the report;
Manufacturing PMI
According to the CBN, the Manufacturing PMI grew in the month of December as the index stood at 51.2 per cent, same as in the preceding month . Of the sixteen manufacturing subsectors, eight reported expansion in the review month in the following order: cement;petroleum & coal products; food, beverage & tobacco products; textile, apparel, leather and footwear; chemical & pharmaceutical products; plastics & rubber products; furniture & related products and primary metal. The remaining eight sub-sectors however reported contraction in the following order: appliances and components; nonmetallic mineral products; transportation equipment; fabricated metal products; paper products; electrical equipment; computer & electronic products and printing & related support activities.
New orders
In terms of new orders, the report also shows New Orders Index registered 52.7 percent in December 2015. The index dropped by 0.2 points below the level achieved in the previous month, indicating slower growth.
The nine sub-sectors that reported increase in new orders were:
- Cement
- Chemical & pharmaceutical products;
- Textile, Apparel, leather and footwear;
- Food, beverage & tobacco products;
- Primary metal;
- Furniture & related products;
- Petroleum & coal products;
- Plastics & rubber products and
- Printing & related support activities.
The remaining seven sub-sectors reported declines in new order in the order:
- Appliances and components;
- Nonmetallic mineral products;
- Electrical equipment;
- Transportation equipment;
- Paper products;
- Fabricated metal products
- Computer & electronic products
Non-Manufacturing (Services)
The composite PMI for the non-manufacturing sector grew after one month of contraction. The index rose to 53.4 points from the 49.6 points registered in the preceding month. Of the eighteen non-manufacturing sub-sectors, twelve grew in the month of December in the following order: agriculture; health care & social assistance; finance & insurance; public administration; transportation & warehousing; wholesale trade; retail trade; accommodation & food services; information & communication; arts, entertainment & recreation; educational services and electricity, gas, steam & air conditioning supply. The remaining six sub-sectors reported decline in the order: management of companies; construction; water supply, sewage & waste management; professional, scientific, & technical services; utilities and real estate, rental & leasing.
New orders
At 56.4 percent, new orders grew at a faster rate in December 2015 for the eleventh consecutive month.
Of the eighteen sub-sectors, eleven reported growth in the following order:
- Finance & insurance;
- Agriculture;
- Health care & social assistance;
- Wholesale trade; retail trade;
- Transportation & warehousing;
- Public administration;
- Electricity, gas, steam and air conditioning supply;
- Educational services;
- Accommodation & food services and arts, entertainment & recreation.
According to the report, new orders on wholesale trade and transportation/warehousing have been growing consecutively for eighteen and ten months, respectively.
Sectors with no change
- Information & communication;
- Utilities and water supply, sewage & waste management reported no change.
Sectors with reduction in orders
- Management of companies;
- Professional, scientific, & technical services;
- Construction and real estate, rental & leasing
Get the full report here