Economy still gloomy as job, production crises worsen

CBN

CBN

• Indices end negative in first quarter
• Forex scarcity hobbles manufacturing

For the third consecutive month of 2016 (Q1), production level, employment data and general business activities recorded disappointing outcomes, with raw material inventories and new orders data, among others, which are facilitated with foreign exchange, falling at a faster rate.

This verdict was contained in the Central Bank of Nigeria (CBN)’s March edition of the Purchasing Managers Index (PMI) for manufacturing. Although the report noted a marginal shift to 45.9 per cent in the period, compared to 45.5 per cent in February, it only showed that the segment remained in the negative line.

The weak numbers in the first quarter of 2016 are an indication that growth in the manufacturing sector is below trend and a reflection of the macroeconomic challenges that have bedeviled the country.

Of the 16 manufacturing sub-sectors, 12 reported decline in the review month, led by transportation equipment; furniture and related products; plastics and rubber products; textile, apparel, leather and footwear; printing and related support activities; non-metallic mineral products; paper products; fabricated metal products; and primary metal, among others.

The production level estimated at 46.6 per cent was also an indication of decline and for the third consecutive month, although at slower rate than the preceding month.

Still, 12 of the 16 manufacturing sub-sectors reported decline in production during the review month, while the appliances and components sub-sector reported no change.

Employment level index in the month of March stood at 45.5 per cent, indicating another decline, but made worse as it also recorded the 13th consecutive month poor performance.

Of the 16 sub-sectors, 13 recorded decline, led by electrical equipment; plastics and rubber products; fabricated metal products; furniture and related products; paper products; appliances and components; primary metal; textile, apparel, leather and footwear; food, beverage and tobacco products; petroleum and coal products; and non-metallic mineral products, among others.

Still, employment level index in the non-manufacturing segment also failed at 43.9 per cent in March 2016, which is the third consecutive month and at a faster rate when compared to the preceding month.

Fifteen sub-sectors reported decline in employment level index, with management of companies; utilities; construction; real estate, rental and leasing; information and communication; arts, entertainment and recreation; public administration; electricity, gas, steam and air conditioning supply; finance and insurance; transportation and warehousing; agriculture; and accommodation and food services, among others, leading the negative data.

The general business activities declined for the third consecutive month, with 11 out of 18 sub-sectors reporting declines led by finance and insurance; wholesale trade; construction; professional, scientific and technical services; management of companies; utilities; real estate, rental and leasing; accommodation and food services; repair, maintenance/washing of motor vehicles; water supply, sewage and waste management and transportation and warehousing.

The development, which is similar to the manufacturing sector, is particularly worrisome as it marks the first time that the sector recorded contractions consecutively since the beginning of the data series.

Again, the sector has been the major driver of growth and highest contributor to absolute nominal and real Gross Domestic Product (GDP) over the years and an indication of poor performance 2016 Q1 GDP numbers.



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