Nigeria’s manufacturing Purchasing Managers’ Index (PMI), a gauge for manufacturing sentiments, moved back into positive territory in August, after recovering from 49.5 in July to 50.9 points, according to data by FBN Quest and NOI.
The index is based upon manufacturers’ responses to set questions on core variables in their businesses.
Respondents, which were large, medium-sized and small companies across the country, were asked whether output, employment, new orders, suppliers’ delivery times and stocks of purchases have improved on the previous month, are unchanged or have declined.
Responses on the five sub-indices, from output to stocks of purchases, have been mostly unchanged, with the proportion all above 50 percent and in two cases above 85 percent in August.
“This tells us that manufacturing is struggling at a modest level of activity, which is borne out by the national accounts,” said Gregory Kronsten, head of research at FBN Quest.
On the driver of the uptick in August, Kronsten said “The individual answers tell us that power supplies had improved, new machinery had been installed and some preparations had started for the end-year holiday season.”
On a 12-month moving average basis, the headline eased from 54.2 to 53.8.
A headline reading above 50 signals expansion, while readings below 50 are negative and signal contraction.
FBN Quest and NOI polls have posted 14 negative readings since the index launch in April 2013, the most recent being in July.
The PMI is also found in developed markets (such as the ISM’s in the US), larger emerging markets such as China, India and Brazil, and a few frontiers. Like in Nigeria, it is based upon manufacturers’ responses to set questions on core variables in their businesses.
China’s official manufacturing PMI slipped from 49.7 to 49.5 in August, its fourth successive month in negative territory. The tariff wars with the US have clearly been a negative factor.
