CBN’s Nigeria PMI: Slowed but remained strong


2/10/2018/Cordros Capital

Earlier on Tuesday, the CBN released its monthly Purchasing Managers Index report which showed sustained expansionary trend for the eighteenth consecutive month in September. The report shows manufacturing and non-manufacturing indices at 56.2 and 56.5 point respectively, suggesting sustained healthy business conditions. Though still well ahead of the 50.0 expansion mark, both indices expanded at a slow pace for the period when compared to last month’s reading of 57.1 and 58.0 respectively. Nonetheless, the Q3-2018 PMI averages of 56.7 and 57.4 (Q2-2018: 56.8 and 57.4 index point), largely underscore our positive growth expectation for both manufacturing and service GDP over the third quarter. To our mind, even as headline inflation resumed uptick in August (+9bps to 11.23% y/y), we believe FX stability and liquidity continues to support activities across manufacturing and non-manufacturing space.

Again, we reiterate that PMI is not always a seamless and consistent guide to economic performance. However, a sustained expansionary reading provides some support to our positive Q3-2018 GDP expectation. For evidence, Manufacturing, Service, and Agriculture contribute 9.3%, 37.5% and 22.9% to GDP respectively, and strong readings over Q3-2018 suggest continued non-oil led GDP growth. In addition, the currency outlook remains strong, with rising oil prices (September: +9.1% m/m to $84.92) and improving domestic production (+4.5% m/m to 1.73 mbpd) suggesting the CBN will continue to support the market to keep rates at around current levels.


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