Culled—Proshare

August 2020

By CSL Research

According to the Purchasing Managers Index (PMI) data released by the Central Bank of Nigeria (CBN) for the month of August, the recovery in activity levels was sustained though readings still remained below 50 index points. Specifically, the manufacturing PMI improved to 48.5 in August from 44.9 in July. The non-manufacturing PMI continued to benefit from the relaxation of the lockdown measures, as it improved to 44.7 in August from 43.3 in July, the third consecutive month of inreases in the index since it fell to an all time low of 25.3 in May. 

Save for Supplier delivery time (-4.5) which declined, the remaining four indices used in gauging the manufacturing sector strengthened in August; New orders (+6.3), Employment level (+4.6), Production level (+4.5) and Raw materials/WIP Inventory (+2.7). The data revealed that, of the 14 surveyed subsectors in the manufacturing sector, six (compared with one in July) reported growth while 8 (compared with 12 in July) contracted. The broader recovery across the subsectors may indicate that the initial impact of the pandemic is dissipating. However, we think it is still early to conclude given the continued ban on international airline operations with its attendant impact on supply chains and FX liquidity constraints.

For the third consecutive month, the non-manufacturing PMI showed broad based improvement across  the four key metrics; Business Activity (46.1 to 47.4), Level of new orders (43.4 to 44.0), Inventory level (42.7 to 43.1) and Employment level (41.1 to 44.3) used in gauging activity level. We believe the relaxation of the social distancing measures has remained positive for the sector, enabling service-based organisations to expand their scale of operations.