Affirming the Bretton Woods institutions’ concerns about recession, the latest Purchasing Managers’ Index (PMI) for the manufacturing sector has continued to reflect the sector’s weaknesses as regards production, new orders, and employment levels.
According to the latest data released by the Central Bank of Nigeria (CBN), manufacturing in the month of June stood at 41.1 points. As key sectors continue to suffer contraction, unemployment may surge in the economy.
The Vice President, Yemi Osinbajo-led Committee on Economic Sustainability Plan, had warned that about 39.4 million people might be unemployed by the end of 2020, if the government failed to take pre-emptive measures.
The latest figure indicates contraction in the manufacturing sector for the second time, a decline compared to 42.4 and 51.1 index points recorded in May and March 2020 respectively.
Specifically, the manufacturing composite PMI contracted further to 41.1 index points in June (from 42.4 in May), the second consecutive contraction.
The contraction in manufacturing composite PMI was due to decline in new orders index to 36.4 in June (from 42.8 in May 2020), which resulted in lower production – the production index decreased further to 36.6 (from 44.5).
Producers were hit with higher costs of production (input price index rose to 67.2 from 61.4), but were unable to pass on costs to customers (output price index remained flat at 53.2) due to the drop in new orders.
According to the Manufacturers Association of Nigeria (MAN), the lockdown in some states and curfew imposed by the Federal Government continued to have a huge impact on production, while access to foreign exchange for critical raw materials remains challenging.
