The Central Bank of Nigeria said the country’s manufacturing purchasing managers’ index, PMI for August declined by 42.1% compared to 44.1% in July.
The CBN noted that production level, new orders, employment level and raw material inventories declining at a faster rate; supplier delivery time improving at a slower rate.
As a crash course to those who are new to the PMI report, a composite PMI above 50 points indicates that the manufacturing/non-manufacturing economy is generally expanding, 50 points indicates no change and below 50 points indicates that it is generally declining
According to the report, of the sixteen manufacturing sub-sectors, fifteen recorded decline in the review month in the following order: nonmetallic mineral products; transportation equipment; petroleum & coal products; fabricated metal products; furniture & related products; cement; appliances & components; printing & related support activities; paper products; computer & electronic products; food, beverage & tobacco products; primary metal; textile, apparel, leather & footwear; plastics & rubber products; and chemical & pharmaceutical products. The electrical equipment sub-sector remained unchanged in the review period.
This further confirms that Nigeria’s recession has finally berth. It also corroborated the National Bureau of Statistics, NBS which reported yesterday that inflation increased from 16.5% in June to 17.25%.
While this shows inflation is still a major issue, the trend shows the pace of increase is slowing down.
The need to act fast is also accentuated by the news that Innoson Motors, Nigeria’s solely indigenous auto manufacturer has also announced that it might close down as a result of Forex scarcity for essential parts.
The federal government of Nigeria must then act quickly to stimulate the economy through increasing spending on capital projects and directing Forex liquidity to the manufacturing sector to boost local production.