Nigeria’s Manufacturing Sector Contracts for Second Month in June

Steel Manufacture At Evraz Plc West-Siberian Metallurgical PlantCooling water spays onto a length of red hot steel as it passes through the rolling mill at the Evraz Consolidated West-Siberian Metallurgical Plant, operated by Evraz Plc, in Novokuznetsk, Russia, on Tuesday, Nov. 24, 2015. Photographer: Andrey Rudakov

Activities in the Nigerian Manufacturing Sector Contracts in June

Activities in the Nigerian manufacturing sector contracted for a second month in the month of June, according to the Central Bank of Nigeria report released on Thursday.

The manufacturing Purchasing Managers’ Index stood at 41.1 in June, slightly below the 42.4 recorded for the month of May.

In the last two months, the index has dropped below the 50 points that separates contraction from expansion. Making it the second time in 37 months that the once positive index will drop below the 50 points as shown below.

PMIAccordingly, out of the 14 subsectors surveyed by the apex bank, only 5 subsectors reported growth above the 50 percent threshold in the following order: electrical equipment; cement; petroleum & coal products; transportation equipment and paper products.

The remaining 9 subsectors posted contraction in the following order: electrical equipment; cement; petroleum and coal products; transportation equipment and paper products. However, the remaining 9 subsectors reported declines in the following order printing and related support activities; textile, apparel, leather and footwear; primary metal; plastics and rubber products; nonmetallic mineral products; fabricated metal products; food, beverage and tobacco products; chemical and pharmaceutical products and furniture and related products.

Similarly, the production level in the manufacturing sector contracted in the month for second consecutive month as manufacturers only achieved 36.6 points in June.

This is because only three of the subsector surveyed recorded growth, while two subsectors remained unchanged, nine subsectors contracted during the month under review.

Also, gauge of demands in the sector showed demand slumped for second consecutive month in June as high unemployment rate due to COVID-19 continues to impact consumer spending and sales across the nation.

Demand dropped to 36.4 in June as only five subsectors recorded growth with the remaining nine declining. However, supply delivery time continues to grow as manufacturers were able to meet demand and deliver on time during the month. Supply delivery time rose to 60.9 in June.

Employment in the manufacturing sector also declined for a second consecutive month in June, according to the CBN report.

New job creation in the sector stood at 38.8 in the month of June, suggesting businesses in the manufacturing sector have not been recruiting in recent months. Out of the 14 subsectors surveyed only 2 recorded increase in new job creation while 11 reported declines with just one subsector managing to maintain existing jobs.

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya

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