According to the Purchasing Managers Index (PMI) data released by the Central Bank of Nigeria (CBN) for the month of January, the momentum in the level of activities cooled in both the Manufacturing and Non-manufacturing sectors.
Specifically, the Manufacturing-PMI for the month of January slowed to 57.9 index points (December; 60.8 index points), following broad-based declines in all of the five major indices; Production level ( -2.2), New orders (-1.8), Raw materials/WIP Inventory (-1.7), Supplier delivery time (-1.4) and Employment level (-0.7) used in gauging the manufacturing sector.
The decline reflects the waning momentum that characterizes business activities at the start of a new year as the impact of pent up demand from festivities thin out.
Like the manufacturing-PMI, the non-manufacturing PMI also moderated, albeit steeper to 59.6 in January (December; 58.7), on the back of weaknesses in Business Activity (62.6 to 59.8), Inventory level (63.1 to 60.4), Level of new orders (61.9 to 59.4), and Employment level (60.8 to 58.9).
Notably, agriculture (+2.4) saw the second-largest improvement, reflecting continued expansion in activity level (+6.4) and growth in new orders (+5.4)- we suspect the sector may be benefitting from the closure of the land borders, making consumers revert to local producers.
In our view, economic activities will likely remain slow in Q1, as the impact of seasonality occasioned by the festive season wanes out. Historically, muted activities in the manufacturing and Non-manufacturing sectors have been a recurring trend in the first quarter of the year as shown by the prior years’ PMI readings.