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December Manufacturing PMI Signals Economic Recovery— CBN

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US Manufacturing
  • December Manufacturing PMI Signals Economic Recovery

The Central Bank of Nigeria, CBN, yesterday, said that the manufacturing sector expanded in December for the first time in eleven months, signalling recovery from the economic which prevailed in 2016. The apex bank disclosed this in its Purchasing Managers Index (PMI) 2016 December report.

The report stated: “The Manufacturing PMI stood at 52.0 index points in December 2016, indicating expansion in the manufacturing sector during the review period. The index had recorded decline in the preceding eleven months.

“Eight of the sixteen sub-sectors surveyed recorded expansion in the review month in the following order: cement, food, beverage and tobacco products; textile, apparel, leather and footwear; plastics and rubber products; paper products; appliances and components; chemical and pharmaceutical products; and furniture and related products.

Production Level Index

“The fabricated metal products sub-sector remained unchanged, while the remaining seven subsectors declined in the order: computer and electronic products; electrical equipment; primary metal; transportation equipment; petroleum and coal products; printing and related support activities; and non-metallic mineral products.

“At 57.6 index points, the production level index for manufacturing sector indicated the sector expanded in the review period, compared to the decline recorded in the preceding eleven months. At 51.8 points, the new orders index showed expansion in new orders after eleven months of contraction. It stood at 45.1 in November 2016.

“At 47.9 index points, the supplier delivery time for manufacturing sub-sectors contracted in the month of December 2016, after nine consecutive periods of expansion. Employment level index in the month of December 2016 stood at 48.6 points, indicating declines in employment level for the twenty-second consecutive month. However, the index shows a slowing contraction in manufacturing employment when compared with the level in the preceding month.

“At 51.6 index points, the index shows an expansion in raw materials inventory in the review month, after declining for eleven consecutive months.”

The report also revealed a slowing of the decline in the non-manufacturing sector in during the month. It stated that: “Business activity, new orders, employment level and raw materials inventories in the non-manufacturing sector declined at a slower rate in December 2016.

“The composite PMI for the non-manufacturing sector declined for the twelfth consecutive month. The index stood at 47.1 points, indicating a slowing contraction when compared to that in November 2016. Of the eighteen non-manufacturing sub-sectors, ten recorded contraction in the following order: construction; public administration; professional, scientific and technical services; information and communication; repair, maintenance/washing of motor vehicles; accommodation and food services; health care and social assistance; finance and insurance; wholesale/retail trade; and electricity, gas, steam and air conditioning supply.

”The remaining eight subsectors recorded expansion in the order: utilities; educational services; agriculture; transportation and warehousing; management of companies; arts, entertainment and recreation; water supply, sewage and waste management; and real estate, rental and leasing”.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

COVID-19 Plunges Nigeria’s Oil Revenue by 41% in the First Nine Months of 2020

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naira

COVID-19 Plunges Nigeria’s Oil Revenue by 41% in the First Nine Months of 2020

Nigeria’s oil revenue declined by 41.44 percent in the first nine months of 2020 to $2.033 billion, according to the latest data from the Nigerian National Petroleum Corporation, NNPC.

This represents a decline of 41.44 percent from $3.47 billion filed in the same period of 2019 when there was no COVID-19.

In the September 2020 edition of NNPC’s Monthly Financial and Operations Report (MFOR), revenue from oil and gas rose by 16 percent to $120.49 million in the month of September, a 66 percent or $234.81 million drop from $355.3 million posted in the same month of 2019.

The global lockdowns caused by the COVID-19 pandemic plunged Nigeria’s crude oil sales and global demand for the commodity. This was further compounded by Nigeria’s high cost of production compared to Saudi Arabia, Russia and others that were offering discounts to boost sales during one of the most challenging periods in human history.

Experts like Prof. Yinka Omorogbe, President of Nigeria Association of Energy Economics, NAEE, were not surprised with the drop in earnings given the effect of COVID-19 on the world’s economy.

She, however, called for the revamp of the nation’s petroleum sector laws and diversification of the economy away from oil revenue dependence. She said “Covid-19 made 2020 a very hot year and it battered the oil industry internationally and we are not an exception; so we could not have been unaffected”.

She also said the effect of the fall “is definitely a wake-up call; we have to diversify, strengthen our other resources and capabilities”.

Omorogbe, a former NNPC Board Secretary, urged the government and the operators in the sector to look inward and think strategically, stating: “think medium term, think of where they want to be and the government, above all, must think of how best we can utilize our resources, so that we can achieve our objectives once we know and define them.

“It is a clear wake-up call, if not we will just sit here and find that we have become one of the poorest nations in the world”, she noted.

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Commodities

Crude Oil, Other Commodities Closing Price for Monday

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Crude oil

Crude Oil, Other Commodities Closing Price for Monday

Brent crude oil, Nigeria’s crude oil benchmark, gained 47 cents to $55.88 per barrel on Monday, while the US crude oil expanded by 50 cents to $52.77 per barrel.

Gold for February delivery fell $1 to $1,855.20 an ounce. Silver for March delivery fell 7 cents to $25.48 an ounce and March copper was little changed at $3.63 a pound.

The dollar fell to 103.80 Japanese yen from 103.83 yen. The euro fell to $1.2139 from $1.2167.

Wholesale gasoline for February delivery rose 1 cent to $1.56 a gallon. February heating oil rose 2 cents to $1.59 a gallon. February natural gas rose 16 cents to $2.60 per 1,000 cubic feet.

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Gold

Gold Gained Ahead of Joe Biden Inauguration 2021

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Gold

Gold Gained Ahead of Joe Biden Inauguration 2021

Gold price rose from one and a half month low on Tuesday ahead of President-elect Joe Biden’s inauguration on Wednesday.

The precious metal, largely regarded as a haven asset by investors, edged up by 0.2 percent to $1,844.52 per ounce on Tuesday, up from $1,802.61 on Monday.

According to Michael McCarthy, the Chief Market Strategies, CMC Markets, the surged in gold price is a result of the projected drop in dollar value or uncertainty.

He said, “The key factor appears to be the (U.S.) currency.”

As expected, a change in administration comes with the change in economic policies, especially taking into consideration the peculiarities of the present situation. In fact, even though Biden, Janet Yellen and the rest of the new cabinet are expected to go all out on additional stimulus with the support of Democrats controlled Houses, economic uncertainties with rising COVID-19 cases and slow vaccine distribution remained a huge concern.

Also, the effectiveness of the vaccines can not be ascertained until wider rollout.

Still, which policy would be halted or sustained by the incoming administration remained a concern that has forced many investors to once again flee other assets for Gold ahead of tomorrow’s inauguration.

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