Nigeria’s purchasing managers’ index (PMI), which includes a gauge that assesses the overall health of the manufacturing sector, saw further improvement in November as demand for goods picked up and the number of people placing orders rose accordingly.
The PMI reading for Africa’s largest economy rose to 54.3 from 53.6 a month earlier, the Stanbic IBTC Bank Nigeria PMI released on Thursday.
This was the fastest pace at which factory activity has improved since April.
A reading below 50 points for contraction, above the threshold indicates progress of activity.
The Central Bank of Nigeria published its own version of the PMI without fail from January 2015 until it suddenly stopped doing so in December 2020.
PMIs are published monthly ahead of official economic data and are known to be the most closely watched surveys of central banks, real sector policy makers and financial markets.
“While the cost of raw materials is putting a strain on businesses, businesses are able to maintain production levels somewhat by passing on the cost to consumers,” said Muyiwa Oni, group head of Equity Research West Africa at Stanbic IBTC Bank.
Manufacturers must pass on costs to consumers Nigeria’s defiant inflation, now at a 17-year high, is driving up operating costs and undermining margins.
Apex bank boss Godwin Emefiele says his monetary policy team will continue to raise rates until inflationary pressures ease.
READ ALSO: Does Manufacturing Matter for the Nigerian Economy?, by Uddin Ifeanyi
The commission last month raised rates for the fourth time in a row, one of the longest rate tightening cycles in eleven years.
The PMI survey found that business confidence fell to its lowest point since records began roughly nine years ago.
“High inflation and aggressive monetary policy tightening may dampen growth prospects in the short term,” Mr. Oni said.
“We now revise our respective growth forecasts for 2022 and 2023 to 2.8%.
y/y and 3% y/y, 3.2% y/y and 3.3% y/y”, he added.
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