Manufacturing Index Expands for Fourth Consecutive Month

As oil reverses gains

Economic recovery appears on the rise with the Manufacturing Purchasing Managers’ Index (PMI) standing at 54.1 index points in July 2017, indicating expansion in the manufacturing sector for the fourth consecutive month.

The PMI is an indicator of the economic health of the manufacturing sector, which is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.

According to the latest PMI released by the Central Bank of Nigeria (CBN) yesterday, 11 of the 16 sub-sectors reported growth in the review month in the following order: appliances & components; computer & electronic products; cement; primary metal; chemical & pharmaceutical products; food, beverage & tobacco products; textile, apparel, leather & footwear; printing & related support activities; paper

products; electrical equipment and transportation equipment.

But the remaining five subsectors declined in the order: petroleum & coal products; fabricated metal products; furniture & related products; non-metallic mineral products and plastics & rubber products.

In the same vein, the production level index for the manufacturing sector grew for the fifth consecutive month in July 2017. The index at 59.3 points indicated an expansion in production at a faster rate when compared to the level recorded in the previous month.

Fourteen of the 16 manufacturing sub-sectors recorded expansion in production level during the review month.

Also, at 52.7 points, new orders index grew for the fourth consecutive month. Eight sub-sectors reported growth, one remained unchanged while the remaining seven declined in the review month.

According to the report, the supplier delivery time index for the manufacturing sector, at 51.3 points in July 2017, rose for the second consecutive month. Ten sub-sectors recorded improved suppliers’ delivery time while the remaining six sub-sectors recorded delayed delivery time.

It also showed that manufacturing employment level index in July 2017 stood at 51.8 points, indicating growth in employment level for the third consecutive month.

According to the report, of the 16 sub-sectors, eight recorded growth, three subsectors remained unchanged while the remaining five sub-sectors recorded decline in employment level

“At 53.6 points, the raw materials inventory index grew for the fourth consecutive month, and at a faster rate compared to its level in June 2017. “Eleven of the sixteen subsectors recorded growth, two recorded no change while three sub-sectors recorded decline in raw materials inventory.

“New orders index at 55.1 points grew in July 2017 for the fourth consecutive month. Of the eighteen subsectors, 15 reported growth; one remained unchanged while the remaining two recorded declines.

“New orders, employment level and inventory growing at a faster rate; business activity growing at a slower rate in July 2017.

“The business activity index rose to 56.8 points in July 2017 for the fourth consecutive month. The index grew at a slower rate when compared to its level in the previous month. Fourteen sub-sectors recorded growth in business activity; one remained unchanged while the remaining three declined in the review month

Crude Oil Price Drops from Two-month High over Increased Supply

Meanwhile, crude oil price slipped by 1.3 per cent from a two-month high yesterday as ample global supplies countered strong demand and expectations for another drop in US crude inventories.

The global benchmark, Brent crude, according to Reuters, was down to $52.03 a barrel yesterday after trading intraday at $52.93, the highest price since May 25 while the US crude was down 1.2 per cent, to $49.57 a barrel.

This is coming as the Managing Director of Nigeria LNG Limited (NLNG), Mr. Tony Attah has called on engineers in Nigeria’s oil and gas sector to continuously strive to acquire and demonstrate cutting-edge competence, which would enable the country fully harness the vast natural resources and grow the nation’s economy.

US inventory reports due today (Wednesday) are expected to show crude stocks fell by 2.9 million barrels last week, the fifth straight week of declines.

However, production by the Organisation of Petroleum Exporting Countries (OPEC) rose in July, Reuters survey found Monday, despite a deal to cut output. According to the report, the cost output has helped boost US oil futures by more than 16 per cent since the contract dropped below $43 a barrel in late June.

Reuters reported that the global benchmark, Brent crude, was down 1.3 per cent, to $52.03 a barrel. It traded intraday at $52.93, the highest price since May 25 while the US crude was down 1.2 per cent, to $49.57 a barrel.

Gasoline and heating oil crack spreads RBc1-CLc1 HOc1-CLc1 were stronger on Tuesday, in part after Royal Dutch Shell said its Pernis refinery in the Netherlands, Europe's largest oil refinery, will remain closed through mid-August following a fire incident.

The latest data point on US inventories comes from industry group the American Petroleum Institute (API).

The US government's official data will be released today.

On the demand side, forecasters, including the International Energy Agency (IEA) have been raising their estimates, lending prices some support.

BP was upbeat, seeing demand growing by 1.4 to 1.5 million barrels per day (bpd).

"Global demand is looking pretty strong, and prices will firm around the levels seen today," BP’s Chief Financial Officer Brian Gilvary reportedly told Reuters after the company reported earnings yesterday.

OPEC, along with Russia and other non-members are reducing output by about 1.8 million bpd from January 1, 2017, until March next year to get rid of excess supply.

OPEC's adherence to supply cuts has been high but in recent months, production has increased due in part to recovering output in countries exempt from the deal.

Oil output by OPEC rose last month by 90,000 bpd to a 2017 high, a Reuters survey found, led by Libya, one of the exempt producers.

In a related development, the Managing Director of NLNG Limited, Mr. Tony Attah, has called on engineers to build cutting-edge competence, which would enable Nigeria fully harness the vast natural resources and grow the nation’s economy.

Speaking at the Society of Petroleum Engineers (SPE) Young Professionals Workshop in Lagos yesterday, Attah, remarked that the country’s oil and gas industry has been pivotal to the nation’s economic wins in the past five decades and still remains so till date, stressing the need for competent professionals who will sustain and develop the sector.

“It, therefore, becomes imperative for the Society of Petroleum Engineers and similar professional associations to stimulate the availability of enabling facilities to nurture and grow the professionals and the technology which will deliver the dividends from the sector to the nation’s economy,” he said.

He added: “In view of this urgent need to support the development of worldclass training structure for engineers, Nigeria LNG Limited spearheaded the improvement of the study of engineering in Nigeria’s top Federal Universities in the six geo-political zones of the country, through its University Support Programme (USP) through which we recently donated buildings and equipment with a total value of $12 million.

“Under the programme, Nigeria LNG built and equipped six Engineering Research laboratories in Ahmadu Bello University, Zaria, University of Ilorin, University of Nigeria, Nsukka, University of Ibadan, University of Port Harcourt and the University of Maiduguri,” he added.