Analyst predicts marginal increase in PMI

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Analyst predicts marginal increase in PMI
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The Nigeria’s Purchasing Managers’ Index (PMI) has been predicted to increase marginally from 50.7 in February to 50.8 for the month of March, 2021.

Analysts at FBNQuest Research, a Lagos based firm stated that on a 12-month moving average basis, the headline index picked up slightly from 50.7 to 50.8 in February.

The research firm said Nigeria’s headline reading for February was above those of China, Japan and Russia, and lags behind the UK, India, the Eurozone and the US (ISM).

“There is no clear historic pattern to our March readings. The answers to our trigger questions this time suggest that we may see a small increase in our next report,” the report by FBNQuest Research disclosed.

The report stated that the country’s manufacturing Purchasing Managers’ Index (PMI), the first in Nigeria, made a good recovery from 44.5 to 53.0 in February.

“Our partner, NOI Polls, collects the data. An index is produced in advanced economies such as by the Institute for Supply Management (ISM) in the US, larger EMs such as Brazil, China and Russia, and a large number of frontier markets. It is based upon manufacturers’ responses to set questions on core variables in their businesses.

“In our case, it is not seasonally adjusted. Our highest reading to date has been 68.7 in December ’17 and our lowest 43.3 during lockdown in May ’20. In our unweighted model (that of the ISM), respondents are asked whether output, employment, new orders, suppliers’ delivery times and stocks of purchases have increased over the previous month, are flat or have declined. A reading over 50 (ex 100) denotes expansion for the sector.

“PMIs, unlike the national accounts, are forward-looking indicators with the proven ability to move financial markets. Q2 ’20 proved the low point of 2020 for both series, GDP contraction of -6.1% y/y and an average manufacturing PMI of 47.7, because it roughly coincided with the lockdown. As the restrictions have been eased, so the indicators have risen off the floor” FBNQuest reports indicated.

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