According to the Purchasing Managers Index (PMI) data released by the Central Bank of Nigeria (CBN) for the month of July, activity levels improved, through readings still remained below 50 index points. Specifically, manufacturing PMI improved to 44.9 in July from 41.1 in June, the third consecutive month of negative (below 50) reading in the sector. However, the continued relaxation of the lockdown measures which enabled service-based
organisations to improve their scale of operations sustained the faster recovery in the non manufacturing PMI for the second consecutive month, as it improved further to 43.3 in July from 35.7 in June.
Although, the readings in the manufacturing sector improved in July (Save for Supplier delivery time (-4.5) which declined, the remaining four indices used in gauging the manufacturing sector strengthened in July; Production level (+8.1), New orders (+6.7), Raw materials/WIP Inventory (+2.2) and Employment level +1.2). We believe the sluggish pace of recovery in the sector when compared with the non-manufacturing sector is reflective of supply chain disruptions given the continued ban on international airline operations, FX liquidity constraints, weak production runs and subdued demand from customers. The data revealed that, of the 14 surveyed subsectors in the manufacturing sector, only transportation equipment subsector reported growth while 12 subsectors contracted.
For the second consecutive month, the non-manufacturing PMI showed broad-based improvement across the four key metrics; Business Activity (34.3 to 46.1), Level of new orders (32.5 to 43.4), Inventory level (38.5 to 42.7) and Employment level (37.4 to 41.1) used in gauging activity level. We believe the continued relaxation of the lockdown measures in the month under review enabled most service-based organisations to improve their scale of operations.
CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.