Analysts at Lagos-based Cordros Capital said the latest Purchasing Managers Index (PMI) data released by the Statistics Department of the Central Bank of Nigeria (CBN), during the period February 12 – 20, 2018, shows that business owners and manufacturers are more optimistic about the prospects of the broader economy than a year ago.
Cordros’ analysts, in a note made available to DAILY INDEPENDENT, said the data marks the second successive month of slower growth in both manufacturing and non-manufacturing PMIs.
The manufacturing PMI in the month of February stood at 56.3 index points, indicating expansion in the manufacturing sector for the eleventh consecutive month.
The February 2018 PMI survey indicated that the index however, grew at a slower rate, when compared to that in the previous month.
Of the 15 subsectors surveyed, 10 reported growth in the review month in the following order: Plastics and rubber products; textile, apparel, leather and footwear; appliances and components; paper products; primary metal; petroleum and coal products; chemical and pharmaceutical products; food, beverage and tobacco products; electrical equipment and furniture and related products.
The remaining five subsectors contracted in the following order: printing & related support activities; cement; nonmetallic mineral products; fabricated metal products; and transportation equipment.
At 57.8 points, the production level index for the manufacturing sector grew for the twelfth consecutive month in February 2018.
The index indicated a slower growth in the current month, when compared to its level in the preceding month. Six of the 15 manufacturing subsectors recorded increase in production level,six remained unchanged, while the remaining three recorded declines in production level during the review month.
The composite PMI for the non-manufacturing sector stood at 56.1 points in February 2018, indicating expansion in the non-manufacturing PMI for the tenth consecutive month.
Eleven of the 16 subsectors recorded growth in the following order: information and communication; wholesale/retail trade; educational services; management of companies; utilities; finance and insurance; agriculture; health care and social assistance; construction; electricity, gas, steam and air conditioning supply; and professional, scientific, and technical services.
“Compared to February 2017, both manufacturing and non-manufacturing PMIs have improved, from contractions of 44.6 and 44.5, by 1,170 bps and 1,160 bps respectively.
“Juxtaposed with January’s data, the figures under review strengthen expectation for sustained output growth in the first quarter of 2018; hence (1) positive corporate performance, (2) bullish sentiments towards risky assets, and (3) stronger expectation for lower yields on government securities.
“To reiterate, the continued improvement in the survey result is consistent with encouraging conditions in the overall economy, including (1) a 4.86% m/m (+43.06% y/y) increase in foreign reserves to $42.35 billion as of February 27, (2) the apex bank’s sustained commitment to forex stability, which has helped narrow the spread between the official and parallel segments of the currency market rates, (3) broad-based output growth in Q4-17 (+1.92% y/y), and indeed positive expectation for 2018, (4) improving inflationary conditions, with headline inflation rate moderating to 15.13% in January (from 15.37% in December 2017), and (5) healthy crude oil prices and stable production.
“Whilst we had attributed the slower pace of expansion recorded in January to the traditionally seasonality-flattered December, we believe February’s case requires some attention. First, we note the drag constituted by contractions in cement (43.8; previously 65.0), transportation and warehousing (48.8, from 64.0), transportation equipment (48.8, from 46.9); and slower growth in agriculture (57.0, previously 61.3), and textile, apparel, leather & footwear”.
