Manufacturers’ raw materials inventory rises on steady forex supply

MAN seeks buffer in shortfalls, sustainability

With the Central Bank of Nigeria (CBN) sustaining its foreign exchange intervention in the real sector for importation of key raw materials, the manufacturing sector’s raw materials inventory index grew for the third consecutive month to close at 52.3 points.

This is just as the Manufacturing Purchasing Managers’ Index (PMI) increased to 52.9 index points in June 2017, showing expansion in the manufacturing sector for the third consecutive month.

Since March the CBN has stepped up its sales of forex to importers, small and medium enterprises and retail (for invisibles). The consequences for the sector have been far greater availability of raw materials and naira appreciation on the parallel market, with the food and beverages segment being the main beneficiary.

According to latest PMI report by the Central Bank of Nigeria (CBN), the PMI is an indicator of the economic health of the manufacturing sector, and is based on five major indicators: new orders, inventory levels, production, supplier deliveries, and the employment environment.

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

The Director-General of the Manufacturers Association of Nigeria (MAN), Segun Kadiri commended the apex bank’s efforts in intervening to ensure that manufacturers access foreign exchange to import their raw materials, even as he sought the bank’s understanding in addressing certain gaps and demands that are yet to be met in some sub-sectors.

The latest PMI report showed that 12 of the 16 sub-sectors reported growth in the review month in the following order: computer & electronic products; paper products; plastics & rubber products; primary metal; transportation equipment; petroleum & coal products; appliances & components; textile, apparel, leather & footwear; furniture & related products; electrical equipment; food, beverage & tobacco products; and fabricated metal products.

On the other hand, four other sub-sectors declined in the order: non-metallic mineral products; cement; chemical & pharmaceutical products, and printing & related support activities.

Just in the same manner, the production level index for the manufacturing sector grew for the fourth consecutive month in June 2017. The index at 58.2 points indicated an increase in production but at a slower rate, compared to the previous month.

14 manufacturing sub-sectors recorded increases in production levels during the review month, while only the non-metallic mineral products and chemical & pharmaceutical products sub-sectors recorded declines in production.

Also, at 51.0 points, the new orders index grew for the third consecutive month. Under this, eight sub-sectors reported growths in new orders in the following order: paper products; primary metal; plastics & rubber products; computer & electronic products; petroleum & coal products; furniture & related products; textile, apparel, leather & footwear; and food, beverage & tobacco products.

The fabricated metal products and transportation equipment sub-sectors remained unchanged, while the non-metallic mineral products; cement; chemical & pharmaceutical products; appliances & components; printing & related support activities; and electrical equipment sub-sectors recorded declines.

The supplier delivery time index for the manufacturing sector at 50.3 points in June 2017 also rose from its contractionary level in the previous month as seven sub-sectors recorded improvement in suppliers’ delivery time.

The employment level index in June 2017 stood at 51.1 points, indicating growth in employment levels for the second consecutive month. Of the 16 sub-sectors, 10 recorded growth in employment while six sub-sectors recorded contractions.