These industries appear to have returned to pre-pandemic levels
In the August sequel of the manufacturing and non–manufacturing Purchasing Manager Index report, the CBN reported that two sub-sectors in the manufacturing space expanded substantially, with the PMI of these subsectors going above the levels reported in February 2020. This development is attributable to the eased lockdown restrictions as operations in these sub-sectors are currently back at pre-pandemic levels.
In the same vein, Plastics & rubber products, Transportation equipment, Chemical & Pharmaceutical products and Textile, apparel, leather & footwork subsectors expanded in the period under review, though the expansion was low when compared with pre-pandemic periods.
Cement and Non-metallic mineral products sub-sector remain resilient
The latest figures released by the apex bank suggest that the manufacturing sector continues to grapple with the knock-on-effect of COVID-19, owing to global and domestic supply chain disruptions, foreign exchange illiquidity, weak consumer spending and high operating costs.
Notwithstanding, activities in the Non-metallic mineral products and Cement sub-sectors remain resilient, as the Purchasing Managers Index for these sub–sectors stood at 66.0 and 64.4 index points respectively, higher than the 65.3 and 62.5 index points reported in February, before the pandemic induced disruption.
fabpulse had earlier reported that manufacturing PMI for August stood at 48.5 index points, indicating contraction in the sector for the fourth consecutive month. Also, out of the 14 surveyed subsectors, 6 sub–sectors reported expansion (above 50 index points thresholds), while the others contracted.
It is imperative to note that this is an improvement when compared to manufacturing activities in May, June or the performance in July which saw 12 sub–sectors decline with one reporting no change, while one expanded.
The impressive performance of the Non-metallic mineral products and Cement sub-sectors, according to the manufacturing PMI report, is attributable to the expansion in production, new orders, employment and raw materials’ inventories.
This is evident in the subsectors’ production which expanded substantially, as the production PMI for Non-metallic mineral products and Cement expanded by 26.9 and 22.3 index points respectively during the month under review.
The new order PMI, a very important component of the index which tracks the level of new orders received for the month, rose sharply by 20.3 and 22.2 index points respectively.
The sharp rise of 22.3 index points indicate that employment in the cement subsector improved impressively, while employment in the Non-metallic mineral products sub-sector improved by 9.4 index points. Also, raw materials inventory grew substantially in the month under review, despite headwinds from higher input prices.
Why this matters
The Non-metallic mineral products and Cement sub-sectors encountered headwinds in key operations as structural bottlenecks, coupled with domestic supply chain disruptions, foreign exchange illiquidity, weak consumer spending and high operating costs affected the operations of these sub–sectors.
Despite the headwinds which resulted in the contraction of the manufacturing sector, it is important that two sub-sectors are back to operating at pre-pandemic levels, while four others continue to thrive and expand.
In conclusion, this development indicates recovery as manufacturers continue to benefit from the relaxation of the lockdown, other sub-sectors are expected to expand in subsequent periods as the economy continues to recover.