Recently, the Central Bank of Nigeria (CBN) published Nigeria’s Purchasing Managers Index (PMI) report for June-2020. According to the report, economic activities remained contractionary during the survey period.
This was as the two primary indexes, manufacturing and non-manufacturing indices, came in at 41.1 and 35.7 points respectively – below the 50.0pt expansionary threshold.
Notably, a month-on-month analysis of the movement in the sub-indices indicated that non-manufacturing economic activities mildly improved in June-2020 as it declined at a slower rate, from 25.3pt in May-2020 to 35.7pt in June 2020. This was amid marginal improvement in economic activities within all the 17 subsectors (save for utility sector) that constitute the nonmanufacturing index.
Meanwhile, the manufacturing PMI declined at a faster rate, from 42.4pt in May 2020 to 41.1pt in June-2020. This was as 9 of the 14 subsectors that make up the index contracted (below 50.0pt threshold) in the review month.
Fundamentally, we believe the mild improvement in the non-manufacturing PMI was because of the partial ease in the restriction of movements within states.
However, the sustained ban on inter-state movements, the lack of liquidity at the FX market, global supply chain distributions, falling demand for non-essential items, were the reasons for the continued contraction in the manufacturing index.
Thus, until the domestic and global economy reopens fully, economic activities might remain contractionary.
United Capital Plc Research