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Impacts of CBN forex drive results in manufacturers’ rising raw materials inventory
After several months of sustained foreign exchange intervention by the Central Bank of Nigeria (CBN), indications have emerged showing rising activities in the nation’s real sector.
Latest Manufacturing Purchasing Managers’ Index (PMI) increased to 52.9 index points in June 2017, showing expansion in the manufacturing sector for the third consecutive month.
Otherwise, the manufacturing sector’s raw materials inventory index grew for the third consecutive month to close at 52.3 points.
PMI is an indicator of the economic health of the manufacturing sector, and is based on five major indicators: new orders, inventory levels, production, supplier deliveries, and the employment environment.
A composite PMI above 50 points indicates that the manufacturing/non-manufacturing economy is generally expanding, 50 points indicates no change and below 50 points indicates that it is generally declining
The latest PMI report showed that 12 of the 16 sub-sectors reported growth in the review month in the following order: computer & electronic products; paper products; plastics & rubber products; primary metal; transportation equipment; petroleum & coal products; appliances & components; textile, apparel, leather & footwear; furniture & related products; electrical equipment; food, beverage & tobacco products; and fabricated metal products.
On the other hand, four other sub-sectors declined in the order: non-metallic mineral products; cement; chemical & pharmaceutical products, and printing & related support activities.
Business Hilights recalls that since March the CBN has stepped up its sales of forex to importers, small and medium enterprises and retail (for invisibles). The consequences for the sector have been far greater availability of raw materials and naira appreciation on the parallel market, with the food and beverages segment being the main beneficiary.
Considering the observable rise, the Director-General of the Manufacturers Association of Nigeria (MAN), Segun Kadiri has commended the apex bank’s efforts in intervening to ensure that manufacturers access foreign exchange to import their raw materials.
He however, sought the bank’s understanding in addressing certain gaps and demands that are yet to be met in some sub-sectors.
Additional details from the PMI also showed that about 14 manufacturing sub-sectors recorded increases in production levels during the review month, while only the non-metallic mineral products and chemical & pharmaceutical products sub-sectors recorded declines in production.