Nigeria’s real sector continued to expand but at a more moderating pace in January, signaled by the Central Bank of Nigeria’s (CBN) Purchasing Managers’ Index (PMI) Survey Report.
Accordingly, Manufacturing PMI rose for the 10th consecutive month to 57.3 points, even as the Non-manufacturing PMI improved for the 9th consecutive month to 58.5 points.
Historically, there has been a close co-movement between Nigeria’s economic growth and PMI since the series began in 2014.
At the time, the PMI printed at 55.8 points with a strong GDP performance of 6.3 percent. Also, the economic recession of 2016, was mirrored by the PMI, which dropped below the positive threshold of 50.0 points to 48.4 points, as GDP contracted 2.1 percent.
With a historically high correlation coefficient of +85.4 percent between both variables, the PMI serves as a timely guidance on the Nigerian economy, as GDP numbers tend to be released with a substantial lag.
The PMI for January expanded at a relatively slower rate on account of declines recorded across all sub-sectors.
The PMI for January expanded at a relatively slower rate on account of declines recorded across all sub-sectors.
However, we note that based on historical performance (past 2 years), January PMI has always printed declines, likely due to the December holiday effect.
Accordingly, we maintain our view that economic growth will be faster in 2018.
(C) United Capital
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