The Central Bank of Nigeria (CBN) on Tuesday released its Purchasing Managers Index (PMI) report which showed that the manufacturing sector contracted slowly in October to 49.4 points from 46.9 index points in September 2020.
This is attributed to slow down in economic activities as a result of Covid-19 pandemic lockdown.
However, the PMI reading shows an improvement when compared with the numbers in the last five months – in May 2020, it stood at 42.4 index points, 41.1 in June, 44.9 in July, 48.5 in August and 46.9 points in September 2020.
Ayodeji Ebo, senior economist/head, research & strategy, Greenwich Merchant Bank, said the improvement could be attributed to the pick up of economic activities earlier this month. However, he said the civic unrest in the past two weeks might have impacted on the PMI numbers for October.
“We expect further improvement in November despite the civil unrest,” Ebo told BusinessDay.
PMI for the non-manufacturing sector stood at 46.8 points in October 2020 from 41.9 points in September 2020, indicating contraction for the seventh consecutive month. Of the 17 sub-sectors surveyed, three subsectors reported growth.
Ayodele Akinwunmi, relationship manager, corporate banking at FSDH Merchant Bank Limited said although the PMI is still lower than 50points, meaning contraction, it is an improvement over the figure released in September.
The improvement he said was on account of the gradual easing of the economy that led to increased suppliers’ deliver time and increase in new orders prior to the crisis that followed the ENDSARS protest.
“With appropriate growth enhancing and confidence building polices in the country, I expect the PMI to cross 50points before the end the year 2020,” Akinwunmi said.
At 48.7 points, the business activity index declined for the sixth consecutive month, indicating contraction in non-manufacturing business activity in October 2020. Three out of the 17 subsectors reported growth in business activities (above 50% threshold) in the review month; while 11 subsectors recorded decline in business activity and 3 subsectors were stationary in the month under review.
The October 2020 PMI survey was conducted by the Statistics Department of the Central Bank of Nigeria during the period October 12-16, 2020. The respondents were purchasing and supply executives of manufacturing and non-manufacturing organizations in all 36 states in Nigeria and the Federal Capital Territory (FCT).
The report shows that In October 2020, suppliers’ delivery time was faster, new orders increased, while employment level and raw materials inventories contracted.
Of the 14 subsectors surveyed, 6 subsectors reported expansion (above 50% threshold) in the review month.
The sub-sectors include electrical equipment, transportation equipment, printing and related support activities, chemical and pharmaceutical products, textile, apparel, leather and footwear and cement. T
he remaining 8 subsectors reported contractions in the following order: primary metal, petroleum and coal products, paper products, fabricated metal products, furniture and related products, nonmetallic mineral products, plastics and rubber products and food, beverage and tobacco products.
At 50.0 points, the production level index in October 2020 for the manufacturing sector indicating halting in contraction which commenced since May 2020. Of the 14 subsectors surveyed, 7 subsectors recorded expansion in production level, 1 subsector maintained current level, while 6 subsectors recorded declines in production in October 2020.