The Purchasing Manager’s Index, PMI report released by the Central Bank of Nigeria, CBN has revealed that the manufacturing sector for the third consecutive month in July to stand at 44.9 index points.
The PMI is a survey conducted by the CBN to show changes in the level of business activities in the current month compared with the preceding month.
The continued contraction in the manufacturing sector is reported to imply that unemployment may rise further in the economy.
According to the Economic Sustainability plan recently released by the Nigerian government, unemployment may hit c.40% by the end of 2020— a trend that may leave the Nigerian economy in a sustained deep recession.
The latest figure shows marginal growth compared to 41.1 and 42.4 index points recorded in June and May 2020 respectively while the Nigerian economy remains on a tepid trajectory as the COVID-19 pandemic continues to disrupt both supply and demand chains of production.
The Central Bank of Nigeria CBN report usually has five PMI components, which include Production level, New Orders, Supplier Delivery time, Employment level, and Raw material inventory. In the month of July, four of the five components shrank in the following order: Production level (44.7), New orders (43.1), Employment level (40), and Raw material inventory (43.2).
Of the 14 surveyed subsectors, the transportation equipment subsector reported growth (above 50% threshold) in the reviewed month, while nonmetallic in the mineral products sector reported no change. The improvement in transportation must have been driven by the gradual easing of lockdown across the country.
However, the remaining 12 subsectors shrank in the following order: printing and related support activities; primary metals; fabricated metal products; paper products; food, beverage and tobacco products; chemical & pharmaceutical products; furniture & related products; electrical equipment; plastics & rubber products; petroleum & coal products; textile, apparel, leather & footwear, and cement.
Also, the non-manufacturing PMI stood at 43.3 index points, indicating a contraction for the fourth consecutive month, though showing signs of recovery compared to 35.7 and 25.3 index points recorded in June and May respectively.
Of the 17 surveyed subsectors, only arts, entertainment & recreation, and transportation & warehousing recorded growth (above 50% threshold), while the remaining 15 subsectors recorded declines in July 2020.