Manufacturers' Confidence Index hits 53.5 Points in Q1 2024

The Manufacturers Association of Nigeria (MAN) has announced that its CEO’s Confidence Index (MCCI) has increased by 1.7 points to 53.5 points in the first quarter of 2024, up from 51.8 points in the fourth quarter of 2023. This marks the first time the index has risen since the third quarter of 2022.

The increase in confidence is attributed to expectations of diesel price easing and naira appreciation in April. While the current business condition and employment indices remain below the 50-point threshold, the outlook for the next quarter is positive, with production levels forecast to increase.

Eight of the 10 sectoral groups recorded confidence levels above 50 points, with the electrical and electronics sectoral group being the exception. Industrial zones in Kwara/Kogi, Edo/Delta, Apapa, Ogun, Kaduna, Imo/Abia, Ikeja, Abuja, and Anambra/Enugu all recorded index scores above 50 points.

According to the report, “All standard diffusion factors increased due to the positive effect of selective reforms and the constant appreciation of the naira in the greater part of last month of the quarter by about 22 per cent and 28 per cent in the official and parallel market respectively.

“This moderately reduced the cost of imported raw materials and machinery as well as the import duty payments during the later part of the quarter,” it stated.

It added that the expectation of easing diesel prices also contributed to the improved perception of manufacturers during the quarter as diesel cost accounts for 48 per cent of their expenditure on alternative energy.

According to the report, the current business condition rose to 46.2 points in the first quarter of 2024 from 44.7 points in the fourth quarter of 2023, while business condition expectation for the third quarter is projected to increase to 59.2 points.

In terms of employment, it stated that the current condition improved from 45.9 points in the fourth quarter of 2023 to 47.5 points in the first quarter of 2024, while it is projected to improve to 51.2 points in the next quarter.

Also, the production level forecast is expected to move upward from a confidence level of 60.1 points to 63.5 points, the report added.

“A cursory observation reveals that indices of Current Business Condition and the Current Employment Condition remained below the 50-point threshold,” it said.

“This was due to the lingering effect of rising inflation, escalated energy prices, exchange instability and unstable Customs duty rate, especially in January and February,” it added.

Across the sectoral groups, the reports showed that eight of the 10 sectoral groups recorded confidence levels above the 50-point threshold. However, the electrical and electronics sectoral group dipped from 56.9 points in the fourth quarter of 2023 to 53.3 points in the first quarter of 2024.

Also, the report shows that the chemical & pharmaceutical and motor vehicle & miscellanies assembly sectors recorded confidence indices below the threshold at 49 and 42.5 points respectively.

In industrial zones, Kwara/Kogi (62), Edo/Delta (61.6), Apapa (60.6), Ogun (60), Kaduna (58), Imo/Abia (57.7), Ikeja (56.3), Abuja(53) and Anambra/Enugu (52.3) industrial zones recorded index scores above the 50-point standard in the quarter under review.