The most recent data from the Central Bank of Nigeria (CBN) indicates that economic activity in Nigeria has exhibited improvement for the first time in more than a year.
Following 13 months of straight contraction, the CBN’s Statistics Department’s August 2024 Purchasing Managers’ Index (PMI) shows an increase in economic activity.
In August 2024, the composite PMI was 50.2 index points, indicating an increase in economic activity. This is a noteworthy trend that represents cautious optimism for many economic sectors.
As stated in the study, “the composite PMI for August 2024 stood at 50.2 index points indicating expansion in economic activities for the first time in thirteen consecutive months of contraction.”
Increased output, fresh orders, and raw material inventories propel growth
The report claims that the PMI survey, which was carried out between August 12 and August 16, 2024, sheds light on the overall performance of important industries like agriculture, services, and industry.
In general, expansion is indicated by a PMI above 50 points, and contraction is indicated by a figure below that threshold.
According to the August PMI survey, increases in output, new orders, and raw material inventories were the main drivers of the economic recovery.
Based on replies from purchasing and supply executives in all of Nigeria’s economic sectors, the survey’s findings indicated that the country’s output was expanding, with 50.8 points representing output, 50.5 points representing new orders, and 51.3 points representing raw material stocks.
But employment levels didn’t stop falling; in August, they registered 48.7 points, which was the eighth consecutive month that employment fell.
Mixed-sector performance
A significant discovery of the document is that although the economy as a whole grew, sectoral outcomes varied.
With a PMI of 50.7 points, the services sector, for example, maintained its expansionary trend for a third straight month.
Increased company activity, fresh orders, and raw material stock levels are all contributing factors to this growth, with the Repair, Maintenance, and Washing of Motor Vehicles subsector spearheading the expansion.
Nonetheless, the sector’s largest contraction was seen in the Transportation and Warehousing subsector.
With a PMI of 50.5 points, the agricultural sector also saw growth for the first time in some months. The subsectors of crop production and agricultural support services saw an increase, whereas the subsectors of livestock, fisheries, and forestry kept declining.
Even with advancements in some areas, the industrial sector continues to encounter difficulties. With 49.2 points, the PMI for the industry sector indicated contraction. Even if the rate of decline in industrial activities is slower than in prior months, this is the seventh straight month of decline.
What to note
The most recent Stanbic IBTC report said that Nigeria’s Purchasing Managers’ Index (PMI) increased slightly to 49.9 in the same month of August 2024, in contrast to the CBN data that places the PMI at 50.2.
Although there was a little improvement in business conditions in August, as indicated by the increase from 49.2 to 49.9, fresh inflationary pressures still provide a challenge to corporate growth.
According to the research, the private sector in Nigeria had no change in business conditions in August. Even though the number of new orders increased somewhat, the growth rate was low and did not boost overall business activity, which slightly decreased.
