MAN says MCCI declined to 55.0 points down from 55.4 points recorded in Q3 2022

The Manufacturers CEO’s Confidence Index, MCCI, of the Manufacturers Association of Nigeria, MAN, quarterly research shows that in the fourth quarter of 2022, the Aggregate Index Score (AIDS of MCCI declined to 55.0 points down from 55.4 points recorded in the third quarter of the year.

According to the quarterly report, the decline in the Aggregate Index Score underscored the persisting challenges and the waning confidence of manufacturers in the economy in the fourth quarter of 2022 over the recorded points in the preceding quarter.

“The AIS declined in the quarter under review due to the persisting increase in the Consumer Price Index (CPI), erosion in Naira value, difficulty in sourcing forex for productive use, high cost of energy, the issue of insecurity and the lingering Russian-Ukrainian war including the associated adversities,” it said.

These concerns among others, the report pointed out are principally responsible for the difficult operating environment and its declining implication on manufacturing activities in the country during the quarter under review, stressing that the Aggregate Index Score, AIS, of MCCI declined to 55.0 points in the fourth quarter of 2022 from 55.4 points obtained in third quarter of the year.

However, the index score of the current quarter, though below that of the previous quarter, indicates that manufacturers generally still have confidence in the economy.

Aggregate MCCI 

The report explained that among the standard Diffusion Factors, Current Business Condition and Business Condition for the next three months, employment condition for the next three months dipped below the benchmark points to 48.8 points which is also below 49.2 points obtained in the preceding quarter, noting that Employment decision by manufacturers is so difficult due to the unpredictability and difficulty in  macroeconomic movement.

“In summation, the fourth quarter of 2022 appeared to be more difficult  to manufacturers than the level of hardship in the preceding quarter due to persisting rise in CPI, high cost of energy, unabated erosion in Naira value and difficulty in sourcing forex including the harsh effect of Russian-Ukrainian war,” it added.

SECTORAL GROUP MCCI

According to the report, activities across the  Sectoral groups such as the Pulp, Paper, Printing & Publishing recorded an index score of 49.6 points and Motor Vehicle & Miscellaneous Assembly (48.4 points), adding that the groups are negatively affected by the harsh operating environment in the quarter under review as their index scores fell below the 50 base points.

It noted particularly that the motorcycle sub-group of the Motor Vehicle & Miscellaneous Assembly has been facing difficulty following the banning of motorcycles by various States Governments in some metropolises.

The report also indicates that Food, Beverage & Tobacco; Textile Apparel & Footwear; Wood & Wood Products; Chemical & Pharmaceutical;  Non-Metallic Products; Domestic/Industrial Plastic & Rubber; Electrical & Electronic; and Basic Metal, Iron & Steel groups all scored above 50 based  point, which suggests  that manufacturers operating in the  groups have confident in the macroeconomy.

Industrial Zone MCCI

In the same vein, activities among industrial zones, in Rivers/Bayelsa (48.0 points) and Cross-Rivers/Akwa-Ibom (46.5 points) zones, which indicates that manufacturers operating in the zones have lost confidence in the economy due to persisting harsh operating environment in the zones in the fourth quarter of 2022 as underscored by their index scores which fell below the benchmark points.

Imo/Abia, Kaduna, Ogun,   Apapa and  Kwara/Kogi  though  have index scores above 50 benchmark points but declined  in the quarter  under review.

On the other hand, Edo/Delta, Oyo/Ondo/Ekiti/Osun, Kano, Ikeja, Anambra/Enugu and Bauchi/Benue/Plateau have index scores above the 50 base points with increase in the quarter under review, which indicates continuous improvement of the confidence of manufacturers operating in the zones in the economy.

Similarly, index scores of the Abuja zone increased to 50.7 points in the fourth quarter of 2022 from 43.5 points obtained in the preceding quarter, which also indicates a significant improvement in the confidence of the manufacturers operating in the zone.

Consequent upon the above trends, it is crucially important for the Government to have a shift towards a better exchange rate management; and moderate the rising energy cost via better management of refined petroleum products imported into the country.

These among other measures would no doubt help to reduce the current high inflation, which is fast eating-up the working capitals of businesses including manufacturing in the economy.