Manufacturing index down 48.5 points in Aug as Nigeria’s currency crisis persists
By Samuel Bankole
The Manufacturing Purchasing Manager’s Index (PMI) fell in August to 48.5 index points, according to the latest the Central Bank of Nigeria (CBN) report, reflecting a continuous decline in productivities in the economy and the impact of dollar shortage on productions.
The CBN PMI report, which surveyed 14 subsectors showed that only six subsectors reported expansion while eight declined significantly.
“The manufacturing sector inventories index contracted for the fifth time in August 2020. At 46.1 points, the
index declined in the review month. Four of the 14 subsectors recorded growth in inventories, the petroleum and coal subsector reported same level of inventories, while the remaining 9 subsectors recorded lower raw material inventories in the review month,” the CBN report stated.
The decline in inventories index may be a reflection of the ongoing dollar shortage in the economy as the regulatory bank ratio hard currency to endusers in the face of dwindling forex reserves as a result of low foreign exchange earnings from the oil sector.
According to the regulatory bank, the six sectors that recorded positive outing in the month include nonmetallic mineral products; cement; plastics & rubber products; transportation equipment; chemical & pharmaceutical products and textile, apparel, leather & footwear.
While Printing & related support activities; electrical equipment; petroleum & coal products; primary metal; furniture & related products; paper products; food, beverage & tobacco products; and fabricated metal products were the eight declining subsectors during the period.
“At 49.2 points, the production level index for the manufacturing sector showed contraction in August 2020 and for the fourth consecutive months.
“Of the 14 subsectors surveyed, 5 subsectors recorded expansion in production level, 3 subsectors reported same level of production, while 6 subsectors recorded contraction in production in August 2020,” the regulatory bank said.
READ DETAILS: Purchasing Managers’ Index (PMI) Survey Report
The report also shows that the employment level index for the month stood at 44.6 points, indicating contraction in employment level for the fifth consecutive months.
“Of the 14 subsectors, 2 subsectors recorded expansion in employment level in the review month; 3 subsectors recorded same level of employment, while the remaining 9 subsectors recorded lower employment level in the review month.
“The PMI for the non-manufacturing sector stood at 44.7 points in August 2020, indicating contraction in non-manufacturing activities for the fifth consecutive months.
“Of the 17 surveyed sub-sectors, only the utilities subsector reported same level, while the remaining 16 subsectors reported contracted in the following order: repair, maintenance/washing of motor vehicles; real estate rental & leasing; professional, scientific, & technical services; management of companies; electricity, gas, steam & air conditioning supply; educational services; health care & social assistance; finance & insurance; construction; arts, entertainment & recreation; transportation & warehousing; accommodation & food services; water supply, sewage & waste management; wholesale/retail trade; agriculture and Information & communication,” the CBN stated.
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“At 47.4 points, the business activity index declined for the fourth consecutive month, indicating contraction
in non-manufacturing business activity in August 2020. Five out of the 17 subsectors reported growth in business activities (above 50% threshold) in the review month; 3 subsectors reported same level, while the remaining 9 subsectors recorded decline in business activity in the review month,” the CBN said.
Nigeria’s economy contracted by 6.1 percent in the second quarter of the year, a reflection of combinations of the impact of coronavirus pandemic and the sharp disruption in the global supply chain resulting in the drop in crude oil revenue for commodity dependent countries like Nigeria.
Also, the decline in the country’s Gross Domestic Product (GDP) reflected the impact of restriction measures introduced by the government to contain the spread of the deadly disease.
The decline in economic output may persist as the country continued to struggle with dollar shortage brought about by the sharp drop in earnings from crude oil exports, which constitutes 90 percent of the nation’s forex inflow.