A margarine manufacturing plant

In a sign of positive economic outlook, the real sector records growth for nine uninterrupted months since emerging from inactivity, according to the latest Purchasing Managers’ Index published by the Central Bank of Nigeria. Bamidele Famoofo reports

Since the second quarter of 2017, when Nigeria, largest economy in Africa, exited its worst recession in 20 years, the manufacturing sector of the economy has not stopped to grow. This cheery news is contained in the Purchasing Managers’ Index report of the Central Bank of Nigeria for December 2017. The PMI report released recently by the CBN indicated that the manufacturing sector expanded every month for nine months, beginning from April 2017.

The PMI is used to measure the health of the manufacturing sector. It is based on five major indicators: new orders, inventory levels, production, supplier deliveries, and the employment environment.


According to the report, the economy as at December 2017, recorded an appreciable increase in all the parameters, except one in December 2017.

“The Manufacturing Purchasing Managers’ Index (Manufacturing PMI) in the month of December, 2017, stood at 59.3 index points, indicating expansion in the manufacturing sector for the ninth consecutive months.” the CBN said.

According to the report, “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 Manufacturing PMI showed that 15 of the 16 subsectors of the Nigerian economy in the review period reported growth in the following order: petroleum and coal products; textile, apparel, leather and footwear; cement; transportation equipment; paper products.

The other subsectors that recorded growth in December are food, beverage and tobacco products; furniture and related products; plastics and rubber products; non-metallic mineral products; printing and related support activities; appliances and components; chemical and pharmaceutical products; fabricated metal products; primary metal and electrical equipment. However, the computer and electronic products sector contracted in the review month.

The PMI report showed that the production level index for the manufacturing sector grew for the tenth consecutive month in December 2017, standing at 63.2 points. The index indicated an increase in production in the current month, when compared to its level in the preceding month. Eleven of the 16 manufacturing subsectors recorded increase in production level; three remained unchanged, while the remaining two recorded declines in production level during the review month.

At 60.0 points, the new orders index grew for the nine consecutive month, indicating increase in new orders in December 2017. Thirteen subsectors reported growth; two remained unchanged while one contracted in the review month.

The report showed that manufacturing supplier delivery time index stood at 57.4 points in December 2017, indicating faster supplier delivery time for the seventh consecutive month. Eleven subsectors recorded improved suppliers’ delivery time, one remained unchanged while four subsectors recorded delayed delivery time.

 The employment level index in December 2017 stood at 53.9 points, indicating growth in Nigeria’s employment level for the eighth consecutive month. Of the 16 subsectors, nine subsectors increased their employment level; three remained unchanged, while four subsectors reduced their employment level in the review month.

Similarly, the Manufacturing sector inventories index grew for the ninth consecutive months in December 2017. At 61.1 points, the index grew at a faster rate when compared to its level in the previous months. Eleven of the 16 subsectors recorded growth, three remained unchanged while two subsectors recorded decline in raw material inventories.

The growth recorded in the manufacturing sector was replicated in the non-manufacturing sector as composite PMI for the non-manufacturing sector stood at 62.1 points in December 2017, indicating expansion in the non-manufacturing PMI for the eighth consecutive month.

The report showed that 15 of the 18 non-manufacturing subsectors recorded growth in the review month.  Arts topped the list of growth among subsectors in the non-manufacturing subsectors, followed by entertainment and recreation.  

Agriculture; transportation and warehousing; utilities; water supply, sewage and waste management; finance and insurance; health care and social assistance; real estate, rental and leasing; wholesale trade; accommodation and food; electricity, gas, steam and air conditioning supply; educational services; construction; information and communication and professional, scientific, and technical services are other sectors that expanded in a declining order.

“The management of companies remained unchanged, while the public administration and repair, maintenance/washing of motor vehicles… subsectors recorded contraction in the review period,” the report revealed.

The report showed that business activities in Nigeria expanded in December, 2017.   “At 67.4 points, the business activity index grew for the nine consecutive month, indicating expansion in business activity in December 2017. The index grew at a faster rate, when compared to its level in the previous month, indicating improvements in business activities in the current month. Sixteen subsectors recorded growth in business activity, one sector remain unchanged, while one declined in the review month.”

Also at 62.2 points, new orders index grew in December 2017 for the ninth consecutive months. Of the 18 subsectors, 15 reported growth; one remained unchanged while two recorded declines.

The employment level Index for the non-manufacturing sector stood at 55.7 points, indicating growth in employment for the eighth consecutive month. Eleven subsectors recorded growth in the review month; three remained unchanged while four recorded declines. Also at 62.9 points, non-manufacturing inventory index grew for the eighth consecutive month, indicating growth in inventories in the review period. Sixteen subsectors recorded higher inventories, while two subsectors recorded lower inventory in November 2017.

 Forex Policy

Economic analysts have attributed the growth in the manufacturing and non-manufacturing sectors of the economy in the last nine months to the bold initiative of the Central Bank of Nigeria to tackle the challenges of the drowning naira against the dollar in the face of dwindling oil price and shortfall in production due to security challenges in the Niger Delta. The CBN released a new foreign exchange policy in February to stem the widening gap between the inter-bank foreign exchange and parallel market rates. To ease the difficulties encountered by Nigerians in obtaining funds for foreign exchange transactions, the CBN provides direct additional funding to banks to meet the needs of the citizens for personal and business travel, medical needs, and school fees.The bank said such retail transactions would be settled at a rate not exceeding 20 per cent above the interbank market rate.Similarly, Nigeria’s Consumer Price Index, which measures inflation, declined for the tenth consecutive time in December, according to the National Bureau of Statistics. CPI decreased to 15.90 per cent, making it 0.01 per cent lower than the 15.91 per cent recorded in October 2017.

Also, Nigeria’s Gross Domestic Product grew in the third quarter of 2017 by 1.40 per cent in real terms, NBS said in its report released in November 2017. In a report titled “Nigeria Gross Domestic Product Report”, the NBS noted that the development represents the second consecutive positive growth since the emergence of the economy from recession in the second quarter of 2017. The report explained that the growth was 3.74 per cent points higher than the rate recorded in the corresponding quarter of 2016, put at –2.34 per cent. It also revealed that the figure was higher by 0.68 per cent points than the rate recorded in the second quarter of the same year, put at 0.72 per cent.

The second quarter growth figure was revised to 0.72 per cent from 0.55 per cent, following revisions by NNPC to oil output, which hence led to revisions to Oil GDP.

Further analysis shows that quarter on quarter, real GDP growth was 8.97 per cent while Year to date Real GDP growth stands at 0.43 per cent.

In the quarter under review, aggregate GDP stood at N29.5 trillion in nominal terms, the NBS said. The growth figure is higher when compared to N26.5 trillion in the third quarter of 2016, resulting in a nominal GDP growth of 10.98 per cent.