Real sector improved further in July – CBN

By Amaka Ifeakandu Lagos

Th e July 2017 survey report on purchasing and supply executives from manufacturing and non-manufacturing businesses for the month of July released by Central Bank of Nigeria recently showed sustained expansions in both the manufacturing and nonmanufacturing businesses. Th e boost in real sector activity could be partly attributed to growing demand for goods and services on the back of improving purchasing power domestically.

Th e review month also recorded improved foreign demand for goods and services. Th e situation was also enhanced with favourable ongoing economic reforms to improve the business environment, led to a strengthening of business sentiment. Th e reforms include eff orts by monetary authority at improving foreign exchange supply to end users. Th is is in addition to measures by the fi scal authority to improve the country s ranking on ease of doing business, enhance economic diversifi cation, etc..

According to the survey, the manufacturing composite PMI stood at 54.1 index point in July 2017 again 52.9 index point the previous month. Th e increase in manufacturing composite PMI was driven by faster expansion in new orders, to 52.7 in July compared to 51.0 in June while there was faster expansion in production level to 59.3 in July from 58.2 recorded in June); and increase in purchase of raw materials/inventories, to 53.6 in July, following an expansion of 52.3 in June.

In the same vein, the index for employment showed sustained increment, to 51.8 in July from 51.1 reported inJune while supplier delivery times shortened, to 51.3 from 50.3, due to improved capacity at input suppliers. Expansion in input prices slowed to 64.1 from 66.6 even as output prices expanded slower to 60.4 from 62.7 the survey report said out of the 16 manufacturing subsectors under survey, 11 sectors recorded expansions better than twelve in the preceding month. However, manufacturers of „Cement, „Chemical & pharmaceutical products, „Food, beverage & tobacco products and „Textile, apparel, leather & footwear recorded expansions: of 64.1, 60.9 , 56.5 and 56.5 respectively from 42.4, 48.1 53.4 and 54.9 recorded the previous month.

On the other hand, the non-manufacturing sector extended its advance as the non-manufacturing composite PMI increased to 54.4 in July 2017 from 54.2 in June 2017. Th is was partly driven by expansion in business activity and incoming business to 56.8 in July but slower than 57.0 in June and 55.1 faster than 54.6 respectively; while employment level and work in progress expanded, to 54.0 (better against 53.4 in June and 51.9 from of 51.8 respectively. Of all 18 non-manufacturing sub-sectors under survey, 16 sectors recorded expansions against 15 in the preceding month). “Agricultural, „Finance & Insurance” and “Wholesale & retail trade sectors saw faster expansions of 63.1, 58.4 and 52.5 respectively from 56.3, 62.3, and 53.8 reported in the preceding period. In another development, an International Monetary Fund (IMF) staff report revised.

Th e 2017 growth target for the Nigerian economy to 0.8 per cent from an earlier projection of 1.2 per cent on the back of limited contribution of the private sector and less inclusive amid crowdingout eff ect of public sector borrowing activities which continued to tighten liquidity and raise interest rates. Th is is in addition to the increase in non-performing loans from 6 per cent in 2015 to 15 per cent in March 2017 arising from delinquent loans to the oil and gas sector.

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