Nigeria’s manufacturing Purchasing Managers’ Index (PMI) grew faster for the 26th consecutive months, indicating further expansion in the manufacturing sector.
According to the CBN’s PMI report, the Manufacturing PMI stood at 57.8 index points in May, up from 57.7 index points recorded in April. However, the consistent rise in PMI did not fully reflect in the latest GDP report, as Nigeria’s manufacturing sector recorded slow growth in the first quarter of 2019.
Growth in PMI Index: The report shows that the manufacturing sector grew at a faster rate when compared to the index in the previous month. Specifically, thirty of the fourteen sub-sectors in the review month all witnessed growth.
Manufacturing PMI: Production Level index for the manufacturing sector grew at 59.1 points. This implies the production level index for the manufacturing sector grew faster for the 27th consecutive month. Eleven of the 14 manufacturing subsectors recorded an increased production level, even as 3 declined.
- New Orders for the review period recorded 56.9 points index. This indicates growth for the twenty-sixth consecutive month.
- The manufacturing supplier delivery time index stood at 58.4 points in May 2019, indicating faster supplier delivery time.
- Employment Level index for May 2019 stood at 57.3 points, indicating growth in employment level for the 25th consecutive months.
- Raw material inventories index for the Manufacturing sector slowed down for May 2019.
Non-Manufacturing PMI: The composite PMI for the non-manufacturing sector stood at 58.9 points in May 2019, indicating expansion in the Non-manufacturing PMI for the 25th consecutive month. The index grew at a faster rate when compared to that in April 2019.
- Business Activity index ( 59.2 points) grew for the twenty-sixth consecutive
month, indicating expansion in nonmanufacturing business activity in May
- New orders index grew at 58.6 points, new orders index grew for the 26th consecutive month in May 2019. All the 17 surveyed subsectors recorded growth in new orders in the review month.
- The employment level Index for the non-manufacturing sector stood at 59.5 points, indicating growth in employment for the 25th consecutive month
- Lastly, at 59.3 points, non-manufacturing inventory index grew for the 25th consecutive months, indicating growth in inventories in the review period.
The Implication: Basically, when it comes to predicting GDP growth, a sustained increase higher than 42.0 PMI is considered the benchmark for economic expansion. As a result, rising PMI suggests robust growth in the manufacturing sector. Ironically, the economy has failed to grow despite the supposed PMI growth.
More so, even though PMI has risen for the umpteenth time, latest GDP data released by the National Bureau of Statistics (NBS) shows that Nigeria’s manufacturing sector recorded slow growth of 0.81 percent in the first quarter (Q1), down from 2.35 percent in Q4 2018.
[Download full report: PMI report May 2019]