FBNQuest’s PMI slips to 54.6 in January

Manufacturing Purchasing Managers’ Index (PMI) declined to 54.6 from 68.7 in January, says FBNQuest in its latest report. The report put together in collaboration with NOI Polls, showed that all five sub-indices declined in December, four of them by more than ten points and that of employment moved into negative territory.

“We cautioned one month ago that such a fall was expected. The holiday season has ended, and with it the temporary boost to consumer demand,” the reported stated.

The headline reading has been above 50 since March. The principal driver has been the CBN’s use of multiple fx windows, which has transformed liquidity.
Manufacturers, or indeed any users of fx, now have reliable access to fx provided that they are comfortable with the price. This is evident from the PMIs but also inflation data and listed company results.

” We have added “trigger” questions, which apply when the respondent has the same answer on a sub-index for two months and then changes it for the third. Two particularly interesting comments this time are references to the fuel scarcity and the non-payment of salaries.

“In the unweighted model of our choice (the ISM’s), respondents are asked whether output, employment, new orders, suppliers’ delivery times and stocks of purchases have improved on the previous month, are unchanged or have declined.
” A headline reading of 50 is neutral. We have posted nine negative readings since our launch in April 2013, the latest in January 2017,” it added.

Manufacturing expanded by 2.6% q/q in Q3 2017. The two largest sub-sectors are food, beverages and tobacco, and textiles, apparel and footwear, which posted growth of 0.6% and 7.5% respectively.

Motolani Oseni