Nigeria’s Manufacturing Sector Sustains Growth

• Nigeria’s Manufacturing Sector Sustains Growth

Business activity in the manufacturing sector expanded even more in the month of April, according to the report released by the Central Bank of Nigeria.

The manufacturing Purchasing Managers’ Index stood at 56.9 in the month, slightly faster than the 56.7 filed in March. The sector has now expanded for thirteen consecutive months.

The report showed out of the 15 subsectors surveyed, 12 grew in the month in the following order: Petroleum and coal products; electrical equipment; appliances and components; printing and related support activities; textile apparel leather and footwear; fabricated metal products; chemical and pharmaceutical products; food, beverage and tobacco products; paper products, furniture and related products; plastics and rubber products; and transportation equipment.

Out of the remaining three subsectors, the cement remained unchanged, while the non-metallic minerals and primary metal subsectors declined.

Production gauge of the sector showed production level stood at 58.6 in the month. Making it the 14th consecutive month of increase in April, however, it expands at a slower pace when compared with the 59.1 recorded in March.

Also, demand in the sector grew at a slower pace, 55.8, in the month when compared to the 56.1 filed in March. Seven of the subsectors recorded growth of new orders while four remained unchanged and the remaining four subsectors contracted in the month.

Employment index showed job creation in the sector expanded at 55 in the month, the twelfth consecutive month of growth. A total of nine subsectors increased their employment level, while three remained unchanged and three reduced their employment level.

The sector remained strong going into the second quarter, however, growth in the sector is stalling, partly because of slowing new orders towards the end of the first quarter. For instance, less than half of the subsectors surveyed experienced a surge in new orders while new orders of more than half are either unchanged or contracting. Suggesting that unstable consumer spending may be impacting growth in the sector.

Despite investment inflows rising in recent months, new investments in the sector are low and weighing on the overall economic outlook as most investments are done in the fixed income market. Therefore, a more complementary monetary rate will help offset the fixed income rush and stimulate growth from within as lower interest rate will help deepen new investment and broaden growth in the sector.