Manufacturers’ confidence in the second quarter rises to 54.6 points.

By Adeleye Kunle

Despite the numerous challenges limiting productive activities in the economy, particularly in the manufacturing sector, the Manufacturers CEO’s Confidence Index (MCCI) increased marginally to 54.6 points in the second quarter of the year (Q2 2022), up from 53.9 points in the first quarter of the year.

Manufacturers were constrained in the second quarter of the year by a combination of poor access to foreign exchange (forex) for importation of raw materials not available locally, the effect of rising global inflation, and the government’s aggressive revenue drive.

Other challenges included frequent national grid outages, an increase in diesel prices, a scarcity of wheat and other manufacturing inputs due to Europe’s ongoing war, widespread insecurity, and so on.

Despite this, the aggregate MCCI score increased to 54.6 points in the second quarter, up from 53.9 points in the first quarter.

These are the key findings of the ‘Manufacturers CEOs Confidence Index (MCCI) for Second Quarter 2022,’ which was released yesterday and made available to The Nation.

The Manufacturers Association of Nigeria (MAN) developed the MCCI index to track changes in the quarterly pulsation of manufacturing activities in relation to macroeconomic and government policy movements.

As a result, the Index serves as a barometer for MAN, aggregating the perspectives of CEOs of manufacturing companies on economic changes.

The MCCI has a baseline index of 50 points, indicating that the economy has reached a stationary point. As a result, any index point above 50 indicates that manufacturers have confidence in the economy and are improving their manufacturing performance, while any index point below 50 indicates the opposite.

The closer the index point is to 100, the greater the level of economic confidence and improvement in manufacturing activity.

The aggregate MCCI score increased to 54.6 points in Q2 2022, up from 53.9 points in the first quarter of the year, indicating a slight improvement in the period and growing confidence in the economy among manufacturers.

According to MAN President Ahmed Mansur, the slight improvement in the index score in Q2 2022 indicated that manufacturers’ confidence in the economy improved slightly over the previous quarter.

He stated that this demonstrated that manufacturers responded to the quarter’s economic challenges with appropriate survival strategies and adjustments.

According to Mansur, such survival strategies and adjustments included the remodeling of production operations following the first-quarter slowdown.

Mansur also attributed the rise in the aggregate index score to feedback on the expected improvement in business conditions, employment conditions, and output levels in the third quarter of the year.

“It is worth noting that business conditions in the quarter under review were more difficult than in the first quarter of the year, while employment conditions deteriorated.”

“However, the operating environment in the quarter under review was somewhat better than the condition in the preceding quarter due to compelling adjustments made by the government, manufacturers, and households in response to general price increases, forex shortages, rising energy costs, scarcity of raw materials, and many other factors brought on by the European war,” Mansur said.

The MAN president stated that the aggregate MCCI score of 54.6 points for the quarter under review, which is 4.6 points higher than the 50 baseline points, demonstrated that manufacturers remain cautiously optimistic about the economy, with the expectation of an improvement in the operating environment.