Nigeria: Report – Manufacturing Sector Lead Growth in September As Economy Maintained Upward Trend


Dike Onwuamaeze

The manufacturing sector led the growth recorded by Nigeria’s private sector in the month of September as the economy retained its steadied growth in the third quarter of 2021.

This was disclosed in the Purchasing Manager Index (PMI) of the StanbicIBTC for the month of September, which stated that the private sector recorded 52.3 points in its headline figure that was derived from its PMI survey against the 52.2 points it recorded in August.

The report stated that “all four of the monitored sub-sectors recorded expansions, with manufacturers seeing the strongest uplift, followed by wholesale and retail, services and agriculture, respectively,” adding that growth was also seen in new orders, employment, and stocks of purchases.

The report attributed the improvement to the solid and accelerated rise in new orders, which panelists mostly linked to the securing of new clients. However, the report noted that contrary to the improvement seen in domestic sales, exports fell at their quickest rate since December amid persisting international COVID-19 restrictions.

The StanbicIBTC PMI report stated that readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 showed deterioration.

It said: “The headline PMI registered at 52.3 in September, little- changed from 52.2 in August, and indicative of a fifteenth consecutive monthly expansion.

“Central to the improvement was a solid and accelerated rise in new orders, which panelists mostly linked to the securing of new clients. Contrary to the improvement in domestic sales, exports fell, and at the quickest rate since December amid persisting international COVID-19 restrictions.”

It, however, stated that the persistent material scarcity and unfavourable exchange rate movements exerted upward pressures on the cost of production and exacerbated the price inflationary pressure in the economy.

Overall input price index

“Overall input price inflation quickened sharply in September and rose to a four-month high. Moreover, the rate of increase was the third most marked in the series, surpassed only by those seen in April and May. Underlying data revealed that rising purchase prices and higher wages drove the increase.

“Purchase costs rose in September, as has been the case in each month since the series started in January 2014. Moreover, the rate of purchase price inflation was the quickest in the series.

“Nearly two-thirds of surveyed respondents registered higher purchase costs in September compared to August. Rising raw material costs, unfavourable exchange rate movements against the US dollar, and higher commodity prices were all key drivers of inflation, according to panel members,” the report said.

The PMI report also said that productivity levels of Nigerian private sector firms rose in September, marking a ten-month sequence of expansion. But the rate of growth was only modest and slowed for the second month running and was much lower than its long-run series average.

It said: “September data pointed to a quicker increase in new orders placed at Nigerian private sector firms. New client wins and an improving demand environment was cited as the main drivers of growth. Overall, the rate of expansion was solid, and in line with the long-run series average.”

Backlog index

The PMI stated that incomplete work faced by Nigerian private sector firms decreased for the sixteenth consecutive month during September.

However, “the employment index rose for the eighth successive month during September, and at a quicker pace than that seen in the previous survey period. According to panel members, greater client demand supported the uplift in headcounts. Only services and agriculture firms raised their staffing levels while manufacturers cut headcounts for the second month running.

“Nigerian companies registered a shortening of supplier delivery times, continuing the trend that began in November 2017. Moreover, the improvement in vendor performance was the strongest in nine months, with around 23 per cent of panellists recording shorter delivery times.

According to panel comments, advance ordering, quieter road conditions, early payments and greater competition amongst clients led to the improvement,” the PMI report said.

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Author : This Day

Publish date : 2021-10-13 07:51:41

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