Nigeria’s manufacturing Purchasing Managers’ Index drops to 56.2 in February

Yemisi Izuora/Joseph Bakare


FBN Capital, the invesment banking unit of FBN Holdings has put its manufacturing Purchasing Managers’ Index (PMI) for Nigeria at 56.2 in February 2015, a marginal drop from 56.4 posted in January.

The February figure is the smallest m/m change since its launch in April 2013.

According to FBN Capital, the delivery times sub-index showed a sharp decline, but all others were higher than the previous month.

It said, “We are not surprised by the normally large movements in the monthly readings because of the challenging operating backdrop.

“Our research concludes that Nigeria could boost its GDP growth by about two percentage points if the electricity industry was able to meet consumption demand. The federal finance minister has estimated the negative impact of the insecurity in the north east at half a percentage point annually.”

To calculate PMI, a selection of companies is asked their view each month on core variables in their business. The respondent, who is characteristically the purchasing manager in a larger firm, has three choices of reply: better, unchanged or worse than the previous month. According to the most used methodology, 50 marks a neutral reading and anything higher suggests that the manufacturing economy is expanding. Readings are released at the start of the new month.

The five variables are output, employment, new orders, delivery times from suppliers and stocks of purchases. They have equal weightings in our index, and respondents are asked to make allowances for seasonal factors. The reports cover a representative sample of the sector with large, medium-sized and small firms. Any broad conclusions about the economy generally on the basis of our reports need to be tentative because we are operating in a near void: there are few sources on sectoral trends.

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