The Aggregate Index Score (AIS) of Manufacturers’ CEO’s Confidence Index (MCCI) declined to 55 points in the fourth quarter of last year (Q4 2022), down from 55.4 points recorded in the third quarter (Q3) of the same year.
MCCI is an index created by the Manufacturers Association of Nigeria (MAN) to measure changes in quarterly pulsation of manufacturing in relation to movements in the macro-economy and government policies.
The Index is, therefore, a barometer used by MAN to aggregate the views of Chief Executive Officers (CEOs) of manufacturing companies on changes in the economy.
The MCCI has a baseline index of 50 points, which suggests a stationary point in the economy.
An index point above 50 points indicates that manufacturers have confidence in the economy and improvement in manufacturing performance, while any index point below 50 points indicates otherwise.
The more the index point tends to 100 points, the higher the level of confidence in the economy and improvement in manufacturing activity.
However, ‘MAN CEO’s Confidence Index: Preliminary Report & Highlights of Findings for Fourth Quarter 2022’ released yesterday, showed that AIS of MCCI declined to 55 points in Q4 2022, from 55.4 points obtained in Q3 of the year.
MAN attributed the decline in the AIS in the quarter under review to the persisting increase in the Consumer Price Index (CPI), erosion in Naira value, and difficulty in sourcing Foreign Exchange (forex) for productive use.
It identified other factors principally responsible for the difficult operating environment and its declining implication on manufacturing during the quarter under review as high cost of energy, the issue of insecurity and consequences of the lingering Russia-Ukraine war.
MAN, however, said the AIS of MCCI fell below the 50 base points in the Pulp, Paper, Printing & Publishing and Motor Vehicle & Miscellaneous Assembly sectoral groups, standing at 49.6 points and 48.4 points.
Similarly, among the industrial zones, activities in Rivers/Bayelsa (48.0 points) and Cross-Rivers/Akwa-Ibom (46.5 points) zones were depressed by high-cost of operating environment in the fourth quarter of 2022 as underlined by their index scores which fell below the benchmark points.
“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 report said.
The MCCI report added that “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.”
Sources:Thenationonlineng
