The index performance shows an improvement in the confidence of manufacturers in the economy
The Manufacturers Association of Nigeria (MAN) use Manufacturers Confidence Index (MCCI) is an index to gauge the change in quarterly pulsation of manufacturing activities to changes in the macroeconomic ambience and Government policies. According to MAN, MCCI is therefore barometer used by Association to garner the perceptions of 400 Chief Executive Officers (CEOs) of MAN member-companies on changes in the economy.
According to perceptions of MCCI comprised of 400 Chief Executive Officers (CEOs) of MAN member-companies the performance of the economy in the second quarter of 2021consolidated on the achievement made in the first quarter after a very difficult period accessioned by the onslaught of COVID-19 pandemic.
Consequently, the report said even though the macroeconomic variables (exchange rate, lending rate and inflation rate) are still very much unfavourable, businesses are able to maintain operation, particularly at the level it was in 2019 before COVID-19 came in 2020.
“On account of the improved economic tranquility, Aggregate MCCI increased to 52.9 points in the Second quarter of 2021 from 49.1 points recorded in the first quarter of the year.
The report disclosed that this is the first time the index value reach and exceeded the 50 neutral points since the First quarter of 2020 when it recorded 44.4 points, thus, suggesting that the macroeconomic ambience improved in the second quarter of 2021.
The Association index report for second quarter 2021disclosed that, the performance shows an improvement in the confidence of manufacturers in the economy.
While the performances of the individual Diffusion Factors mimicked the Aggregate score except the index of Current Employment which recorded 48.3 points in the quarter under review from 39.7 points observed in the preceding quarter. Although, the index of Current Employment is still below the 50 neutral points, it improved by 8.6 points.
However, the performance indicated that employment in the sector was still sluggish in the second quarter of the year, the report added.
Current Business Condition scored 50.8 points in second quarter of the year as against 46.7 points recorded in the preceding quarter, thus, indicating 4.1 points increase over the quarters which was the first quarter that Current Business Condition scored over the 50 neutral points from the first quarter of 2020.
MCCI report noted that Index of Business condition for the next three months also increased to 54.9 points int the second quarter of 2021 from 53.4 points recorded in the preceding quarter; thus, indicating 1.5 points increase over the quarters. In the same vein, Index of Employment condition in the next 3 months increased to 50.7 points in the second quarter of the year from 47.1 points scored in the preceding quarter. Also that was the first time the Index of Business Condition for the next 3 months scored above the 50-neutral point since the fourth quarter of 2019.
The report further stated that Index of Production for the next 3 months increased to 60.2 points in the second quarter of 2021 from 58.7 points recorded in the preceding quarter, thus, indicating 1.5 points increase over the quarter. According to the report, the improved scores of the Indexes support the continuous improvement in the macroeconomy following the economic devastation by the COVID-19 pandemic.
“As the confidence of the manufacturers on the economy gradually improves, it is important that the identified challenges of the sector are adequately addressed so as to continue to advance the momentum of manufacturing in the country.
“In the second quarter of 2021, the normalcy and tranquility seen in the economy in the first quarter of the year was sustained as business activities increasingly rebounded from the hangover of COVID-19 pandemic.
Association revealed that this is corroborated by the increase in MCCI scores for the second quarter of the year to 52.9 points from 49.1 points recorded in the first quarter. The index score of 52.9 points in the quarter under review was the first it stayed above the 50-neutral point since the first quarter of 2020, report stressed.
Consequently, 400 Chief Executive Officers (CEOs) of MAN member-companies said the index performance underpinned the improvement in the confidence of manufacturers on the economy, although much is still required to ensure that the current momentum in the economy is sustained and improved upon.
Therefore, MAN pointed out that this report provided critical recommendations that addressed the various challenges of the manufacturing sector as identified by manufacturers in the quarter under review.