The Nation Newspaper

Tag: PMI

  • PMI rises to 58.8 in March

    The Purchasing Managers’ Index (PMI) report released by Stanbic IBTC Bank Nigeria has shown that private sector business conditions improved at an unparalleled rate in March. This was led by record growth in new orders, employment and stocks of purchases.

    Panel respondents frequently noted an upturn in demand across the domestic market, whilst new export orders also returned to growth in the latest survey. Price pressures sharpened in March, with both input and output charge inflation registering above their respective long-run averages.

    The PMI readings above 50 signal an improvement in business conditions on the previous month, while readings below 50 show deterioration.

    The March figure showed that at 58.8, up from 56.0 in February, the figure accelerated to a record high in March. This signals the fastest improvement in business conditions since the survey began in January 2014.

    Furthermore, the first quarter of 2018 indicated the strongest quarterly expansion on record.

    Inflows of new business received by private sector firms were key component of the latest expansion. The rate of growth was unprecedented in March, with many firms reporting a strong upturn in domestic economic conditions. New order books have been improving continuously since the start of 2017. Meanwhile foreign demand returned to expansion in the latest survey.

    In response to record inflows of new orders, firms increased output at a sharp rate. The rate of expansion was strong overall and the third-fastest since the survey’s inception.

    Reflecting the increase in output requirements, firms hired additional staff at a record pace in March. Job creation has been recorded in every month since May last year. Despite the increase in staff numbers, inflows of new orders outpaced output capacity, as indicated by a solid increase in backlogs of work in the latest survey.

    In terms of inflation, average cost burdens increased at a historically elevated pace in March. The rate of input inflation was the fastest recorded for 49 months and was comprised of both rising staff costs and higher raw material prices.

  • PMIs in merger bids to beat recapitalisation deadline

    Primary Mortgage Institutions (PMIs) are considering mergers and acquisitions to beat the April 2013 deadline to recapitalise their operations, The Nation has learnt.

    Other plans include approaching the capital market for funds to execute capital projects and for reca-pitalisation. The development is necessary to enable PMIs that wish to operate at the national level raise their capital base from N100 million to N5 billion; those seeking to play at the states’ level must have N2.5 billion before the deadline expires.

    According to operators, the step will enable the banks consolidate their businesses, compete favourably, and avoid being axed by CBN.

    Managing Director, Skyfield Savings & Loans Limited Mr Kola Abdul said mergers and acquisitions have become necessary to enable the PMIs get fresh capital for their operations. Abdul said mortgage banks can only work efficiently when they have enough capital at their disposal, adding that negotiations are on-going among the banks to merge their operations and get the needed capital before 2013.

    Mortgage banks, he said, are not looking at their sizes with regards to mergers and acquisitions, arguing that the ultimate is meeting the deadline.

    He said: “The smaller mortgage banks need to merge with the bigger ones, in view of the recapitalisation deadline. The CBN has provided a flexible recapitalisation regime by directing the firms to either play at the state or national level. Therefore, the issue of merger is a welcome development that would foster the growth of the sub-sector. There is no way mergers and acquisitions would not take place under the present dispensation.”

    According to him, the issue of continuous devaluation of the naira has watered down the local currency and the operational capital of the mortgage institutions.

    “The required capital to set up a mortgage firm has become low due to the instability of the foreign exchange market. What a mortgage firm is holding in its vault to meet operational demands is nothing now. N200 million is nothing when the sub-sector is expected to finance big-ticket transactions for the growth of the economy. Often times, when you finance mortgages, you get locked to bad foreign exchange regime. To finance another one becomes a problem.“

    He said mortgage banks are contributing less than one per cent to the Gross Domestic Product (GDP), adding that its contributions would increase after the banks have pooled their capital base in the name of mergers and acquisitions.

    Abdul said PMIs would become functional at the secondary market in line with the CBN’s recapitalisation order.

    The Executive Secretary of Mortgage Banking Association of Nigeria (MBAN), Mr Kayode Omotoso, said mortgage institutions would approach the capital market to source for funds. Omotoso said apart from raising funds from the capital market, there would be mergers and acquisitions as well as takeovers in the mortgage banking sector in the coming months.

    “There would be mergers, there would be acquisitions, there would be takeovers, there would be strategic investments and there would be efforts to go to the capital market for the mortgage banks to meet up with the recapitalisation deadline. More mortgage banks will approach the capital market to raise equity while the sector itself will approach the capital market to raise equity, hybrid and long term debt instrument to finance home ownership,” he added.