NIGERIA PMI - Economic expansion strengthens in November
Economic expansion strengthens in November
The CBN released Nigeria’s Purchasing Managers’ Index (PMI) for the month of November with both manufacturing (55.0 to 55.9), and non-manufacturing (55.3 to 57.6) sectors expanding at a quicker pace.
The manufacturing sector expanded at a record pace in November as all five sub-indices accelerated during the month. At 57.6, non-Manufacturing PMI was by far the highest in 2017 (previous: 55.3 in October), suggesting a marked month-on-month improvement in the broader services sector of the economy. Similar to the manufacturing sector, all four sub-indices expanded at a faster pace, led by Business Activity (57.5 to 59.4) and New Orders (55.7 to 58.4) – pointing to strengthening aggregate demand.
The seasonal boost should drive another strong PMI reading in December. Although we expect Q4’17 GDP to come in positive, we adopt a cautious stance amidst underlying consumer weakness and forecast growth of 1.0% y/y (2017E: 0.6% y/y). Our outlook for 2018 is much brighter, supported by receding inflation and likely monetary stimulus, continued stability in the foreign exchange market, and improvements in consumer spending power and aggregate demand. We forecast GDP growth of 2.0% y/y.
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