As the year comes to an end, financial and economic analysts finalize their summations of the performance of their nations based on several parameters of assessment.
Usually, econometric models are used on large amounts of data to ascertain the health or otherwise of a country.
The Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) was released and Markit Economics took a critical look at it.
According to Investopedia, the Purchasing Managers’ Index is a measure of an index of the prevailing direction of economic trends in the manufacturing and service sectors.
It consists of a diffusion index that summarizes whether market conditions, as viewed by purchasing managers, are expanding, staying the same, or contracting.
In essence, it is a measure of the health of the manufacturing and service sectors of an economy. It is usually an aggregation of purchasing managers’ opinions about economic trends, especially as they affect their business activities.
A positive reading is good for the country, and bad when negative.
The purpose of the PMI is to provide information about current and future business conditions to company decision-makers, analysts, and investors.
According to Markit Economics, who looked critically at the Stanbic IBTC Bank Nigeria PMI, it rose by +0.9% to a four-month high of 55 in November of 2021, up from 54.1 in the previous month.
The latest reading indicated a solid expansion in business conditions, bringing the sequence of growth to 17 months. Both output and new orders increased solidly and at faster rates.
Also, despite FX, insecurity, and energy challenges, stocks rose at the fourth-most marked rate in the series history, as firms sought to protect against future shortages.
However, private sector performance was overshadowed by a record increase in overall costs amid ongoing global supply issues and unfavorable exchange rate movements.
Looking forward, business sentiment remained positive in November, fueled by plans to broaden product offerings, although the degree of optimism moderated to a three-month low amid concerns over the pandemic.
According to Trading Economics global macro models and analysts' forecasts, Nigeria's composite PMI is expected to be 53.60 points by the end of this quarter.
In the long term, the Stanbic IBTC Bank Nigeria PMI is projected to trend around 53.00 points in 2022 and 54.00 points in 2023, according to our econometric models.
The Composite PMI in Nigeria averaged 53.21 points from 2014 until 2021, reaching an all-time high of 59.10 points in May of 2018 and a record low of 37.10 points in April of 2020.
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