FBN Capital, the investment banking unit of FBN Holdings on Thursday launched its manufacturing Purchasing Managers’ Index (PMI) which it said it hoped will develop into an accepted forward economic indicator for analysts, policymakers and participants in the financial markets.
According to the company, “The index is a familiar data release at the start of the month in developed economies and the larger emerging markets such as China and Brazil. We understand that ours is the first in Nigeria. The April reading of 59.6 is particularly strong: any reading above 50 suggests that the manufacturing sector is growing.”
On the content of the index, the bank said; “The index is based on the responses of a number of manufacturing companies to set questions on core variables in their businesses; In this case they are asked each month whether output, employment, new orders, suppliers’ delivery times and stocks of purchases had increased, were unchanged or had decreased from the previous of month. The question on delivery times is inverted: shorter times are a positive.
“Our sample is a representative blend of large, medium-sized and small companies; Respondents are asked to take seasonal factors into account; our first headline reading of 59.6 would be questioned if it was taken in a developed economy. However, we should recall that Nigeria is a frontier economy which has been growing by at least 6% annually for a decade; further, its manufacturing sector has been growing by at least 5 per cent year-on-year for the past eight quarters.”