Nigeria’s Manufacturing Index Contracts in June

Obinna Chima

The Manufacturing Purchasing Managers’ Index (PMI) stood at 41.1 in June 2020, which reflected a

contraction in the manufacturing sector for the second time.

The PMI report posted on the Central Bank of Nigeria’s website showed that of the 14 surveyed sub-sectors, five sub-sectors reported growth (above 50% threshold) in the review month in the following order: electrical equipment; cement; petroleum and coal products; transportation equipment and paper products.

However, it listed nine sub-sectors that reported decline to include: printing and related support activities; textile, apparel, leather and footwear; primary metal; plastics and rubber products; nonmetallic mineral products; fabricated metal products; food, beverage and tobacco products; chemical and pharmaceutical products and furniture and related products.

At 36.6 points, the production level index for the manufacturing sector declined in June 2020 for the second consecutive month.

The report stated that three sub-sectors recorded increased production level, two remained unchanged, while nine sub-sectors recorded declines in production level in June 2020.

According to the report, the manufacturing supplier delivery time index stood at 60.9 points in June 2020, indicating growth in supplier delivery time index for the second time.

The index recorded growth from the contraction level recorded in March 2020.

In all, nine of the 14 sub-sectors recorded improved suppliers’ delivery time, three sub-sectors reported no change while two recorded slower delivery time in June 2020.

“The employment level index in June 2020 stood at 38.8 points, indicating decline in employment level index for the third month. Of the 14 sub-sectors, two sub-sectors recorded increases in employment, one sub-sector remained unchanged, while the remaining 11 sub-sectors recorded lower employment level in the review month.

“The manufacturing sector inventories index showed contraction for the third time in June 2020. At 41.0 points, the raw materials inventories index is contracting at a slower rate when compared to its level in May 2020.

“Three of the 14 sub-sectors recorded reported growth in inventories, one remained unchanged, while the remaining 10 sub-sectors recorded lower raw material inventories in the review month,” the report added.

Furthermore, the composite PMI for the non-manufacturing sector stood at 35.7 points in June 2020, indicating contraction for the third consecutive month, but showing gradual recovery in non-manufacturing activities when compared to the index in May 2020.