Nigeria’s manufacturing Purchasing Managers’ Index (PMI) rose to 51.1 index points in the month of June, surpassing the 50-index point benchmark. This represents a 2.2-point increase compared to the 48.9 points recorded in the previous month.
This is contained in the Central Bank of Nigeria communique of the Monetary Policy Committee meeting held on Tuesday, 19th July 2022.
According to the apex bank. the improvement in the PMI reflects the continued rebound in economic activities due to improvements in supplier delivery time; raw materials inventory; employment levels as well as expansion in some sectors such as agriculture, accommodation, and electricity, amongst others.
In the same vein, the non-manufacturing PMI rose past the 50 points index benchmark to reach 50.2 index points in the review month from 49.9 points recorded in the month of May.
A PMI of above 50 points is likely to allay fears of a likely recession as Nigerians deal with high inflation and scarcity of forex to meet the importation of raw material inputs.
What the CBN said
“According to the National Bureau of Statistics (NBS), Real Gross Domestic Product (GDP) grew by 3.11% (year-on-year) in the first quarter of 2022, compared with 3.98% in the fourth quarter of 2021 and 0.51% in the corresponding period of 2021.”
“This consistent positive performance was driven largely by the continuous growth in the non-oil sector, specifically, in the services and agriculture subsectors; ongoing policy support post-COVID lockdown; and the base effect from the corresponding period.”
- Meanwhile, the apex bank also projected that Nigeria’s economy will continue on its path of sustained positive growth observed in the last few quarters after the economic recession in 2020.
- This indicates the CBN does not expect the country to post a negative GDP growth rate or slip into a recession.
Why this matters
The PMI Survey report is a monthly index that indicates the changes in the level of business activities in the current month compared with the preceding month, which helps to give an indication of how the economy is performing on a monthly basis.
- The index usually ranges between 0 and 100. 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 purchasing managers’ index helps analysts and economic enthusiasts to predict the direction of the economy in real-time.
- The rise in the PMI reflects some level of growth in business activities in the manufacturing and non-manufacturing sector of the Nigerian economy.
