PMI: Employment Level Rises as Manufacturing Sector Rebounds
Manufacturing sector of the Nigerian economy has started journey to strong improvement despite multiple pressures facing the global economy.
According to the Purchasing Managers Index (PMI) data released by the Central Bank of Nigeria (CBN) for the month of November, activity levels in the manufacturing and non-manufacturing sectors strengthened.
However, manufacturing PMI breaking into expansion territory while non-manufacturing PMI readings remained below water.
Specifically, the manufacturing PMI expanded to 50.2 in November from 49.4 in October as the sector continues to show remarkable recovery from the lows of June 2020.
The non-manufacturing PMI continued to show strength, expanding to 47.6 in November from 46.8 in October, indicating slowing contraction in the sector.
Across the key indices in the manufacturing PMI, save for New orders (-0.7) which recorded some deterioration, the remaining four indices in the manufacturing sector improved in November.
Raw materials/work-in-progress inventory (+2.3), supplier delivery time (+0.4), production level (+1.7) and employment level (+1.3).
In a macro note, CSL Stockbrokers thinks the deterioration in new orders reflects pressure on consumer income and consequently demand.
“This remains a long term concern for us”, CSL Stockbrokers stated.
Furthermore, the firm noted that while employment level and raw material inventories improved in November, they remain below the 50-point mark.
Interpreting the figure, CSL Stockbrokers said this reflects sustained weakness in labour employment and FX illiquidity challenge which continues to weigh on raw materials importation.
The data further revealed that, of the 14 surveyed subsectors in the manufacturing sector, six (same as October) reported growth while eight (same as October) contracted.
For non-manufacturing PMI, performance of key metrics was mixed as two recorded improvement while others declined.
Across all the indices; business activity (+1.8) & employment level (+2.5) improved while level of new orders (-0.9) and non-manufacturing inventory level (-0.2) weakened.
Analysts noted that business activity metric climbed above 50-point expansion mark which indicates many non-manufacturing businesses are finally opening up activities in time for the festive period.
That said, analysts at CSL Stockbrokers said they think the discretionary nature of some of the services of businesses within this sector reflected in the weakness in new orders.
Also, covid-19 restrictions on businesses like recreation & entertainment will continue to drag the sector in the short to medium term.