January PMIs Head South as New Orders Slow amid Increased Selling Prices…

Must Read

FG, States, LGAs share N528.39bn FAAC allocation in Jan 2021

The Federation Account Allocation Committee (FAAC) disbursed the sum of N619.34bn to the three tiers of government in December...

How To Block Your Bank Account And SIM Card In Case Of Emergency

Losing your phone and wallet or having them stolen can be very frustrating. However, in case that happens to...

List of United Bank for Africa (UBA) Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number that usually identifies both the bank and the branch where an account is held. The sort...
- Advertisement -

Recently released Purchasing Managers’ Index (PMI) survey report by Central Bank of Nigeria (CBN) showed slower growth in both manufacturing and non-manufacturing businesses in January 2020 as production level and new orders indices moved southwards.

January PMIs Head South as New Orders Slow amid Increased Selling Prices… - Brand Spur

According to the survey, the manufacturing composite PMI expanded slower to 59.2 index points in January (from 60.8 in December), the seventeenth consecutive expansion. The sluggish growth in manufacturing composite PMI was due to slower expansion in production level index to 59.6 in January 2020 (from 61.8 in December 2019) which was necessitated by declining expansion in new orders – the index decreased to 59.7 in January 2020 (from 61.5 in December 2019).

New orders and production quantity slowed because producers increased their selling prices (output price index rose to 55.3 from 51.9) as average costs of production became expensive, reducing producers’ margins, (input price index rose sharply to 63.5 from 59.2). Suppliers of raw materials delayed on the delivery time of inputs despite slower production level – supplier delivery time index moderated to 59.1 in January (from 60.5 in December 2019).

- Advertisement -

Given the lower production level, slower demand and delay on delivery time, raw materials/work-in-progress expanded slower, to 59.1 from 62.4 as the producers reduced their quantity of raw materials purchased – the quantity of purchase index expanded slower, to 54.6 from 57.0. We saw the stock of finished goods reduce – its index expanded slower to 51.0 in January 2020 from 52.8 in December 2019 as producers resorted to selling inventories as opposed to manufacturing more products given the rising input costs.

The number of new hires recorded by manufacturers declined in tandem with the lower production volume – the index for employment fell to 57.3 points in January 2020 (compared to 58.0 points in December 2019). Of the fourteen manufacturing sub-sectors surveyed, only six sub-sectors (or 42.86%) recorded faster expansions, lower than the thirteen (or 92.86%) printed in December 2019.

Read Also:  Lagos Trains 450 Entrepreneurs in Coconut 'Waste to Wealth' Initiative (Photos)

Particularly, manufacturers of ‘Petroleum & coal products’, ‘Transportation equipment’ and ‘Furniture & related products’ registered the sharpest expansion in activities of 85.0 (from 75.8), 81.7 (from 70.0) and 68.0 (from 63.4) respectively. Meanwhile, the non-manufacturing sector recorded sustained expansion but at a slower pace as its composite, PMI fell to 59.6 index points in January 2020 (from 62.1 index points in December 2019), the sixteenth consecutive expansion.

This was driven by slower expansion in business activity and incoming business to 59.8 (from 62.6) and 59.4 (from 61.9) respectively. Business activity shrank despite the average price of inputs which expanded slower too, 51.2 index points in January 2020 (from 56.0 index points in December 2019). Service provider’s inventories reduced to, 60.4 (from 63.1) as incoming business slowed.

- Advertisement -
Read Also:  Join ITEL Unlock your #S13 #Challenge and be the lucky Winner

Similarly, employment expanded slower to 58.9 (from 60.8) amid slower business activity. Of the seventeen manufacturing sub-sectors surveyed, six sub-sectors (or 35.29%) recorded faster expansions, recording a worse performance than the fifteen (or 88.24%) it printed in December. Notably, service providers of ‘Utilities’, ‘Electricity, gas, steam & air conditioning supply’, and ‘Construction’ registered the sharpest expansion in activities of 65.6 (from 64.6), 62.5 (from 57.0) and 62.1 (from 61.5) respectively.

We note that the downward trend in composite PMIs in the first month of the year 2020 was amid a relative drop in demand from the month of December when businesses experience a high demand for products and services. We also observed that the increased selling prices of products which were induced by higher input costs could further send inflation rate northwards in January 2020. Albeit we commend CBN’s proactive move at curbing the rising inflation rate, as the increase in cash reserve ratio is expected to partly address the general increase in prices.

Cowry Research

- Advertisement -
January PMIs Head South as New Orders Slow amid Increased Selling Prices… - Brand SpurJanuary PMIs Head South as New Orders Slow amid Increased Selling Prices… - Brand Spur

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

January PMIs Head South as New Orders Slow amid Increased Selling Prices… - Brand SpurJanuary PMIs Head South as New Orders Slow amid Increased Selling Prices… - Brand Spur

Latest News

Proposed New Measures By The African Telecommunications Union And Ericsson Set To Expand Africa’s ICT Space

African Countries and telecommunications stakeholders have today launched the first set of ATU spectrum recommendations that focus on transforming...
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -January PMIs Head South as New Orders Slow amid Increased Selling Prices… - Brand SpurJanuary PMIs Head South as New Orders Slow amid Increased Selling Prices… - Brand Spur