The Central Bank of Nigeria (CBN) has reported a positive shift in economic activities for the first time in over a year, according to its latest Purchasing Managers’ Index (PMI) report for August 2024.
PMI Indicates Economic Growth
The CBN’s Statistics Department revealed that the composite PMI for August 2024 reached 50.2 index points, marking a notable expansion in economic activities after thirteen consecutive months of contraction. A PMI reading above 50 points generally signifies growth, while a figure below 50 indicates contraction.
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Drivers of Growth
The PMI survey, conducted from August 12 to 16, 2024, highlights key factors contributing to this economic upturn. The growth was primarily driven by increases in output, new orders, and raw material stocks. Specifically, the output index was at 50.8 points, new orders at 50.5, and raw material stocks at 51.3, all indicating expansion.
However, despite the overall positive trend, employment levels continued to decline, with a PMI of 48.7 points in August, marking the eighth consecutive month of contraction in employment.
Mixed Sectoral Performance
The report outlines a mixed performance across various sectors:
- Services Sector: Continued its expansionary trend for the third consecutive month, with a PMI of 50.7 points. Growth was driven by increased business activities and new orders, particularly in the Repair, Maintenance, and Washing of Motor Vehicles subsector. However, the Transportation and Warehousing subsector experienced the highest contraction within this sector.
- Agricultural Sector: Saw growth for the first time in several months, with a PMI of 50.5 points. Notable growth was observed in crop production and agricultural support services, while subsectors like livestock, fishing, and forestry continued to decline.
- Industrial Sector: Faced ongoing challenges, with a PMI of 49.2 points indicating contraction for the seventh consecutive month, although at a slower rate than in previous months.
Discrepancy in PMI Reports
While the CBN report indicates a PMI of 50.2 for August 2024, the latest report from Stanbic IBTC presents a slightly different picture. According to Stanbic IBTC, Nigeria’s PMI rose marginally to 49.9 in August. This report notes a slight improvement in business conditions but highlights continued inflationary pressures that are affecting business growth. The Stanbic IBTC report shows that, despite a small increase in new orders, overall business activity remained largely unchanged, with a modest decline in growth rate.
While the CBN’s PMI report reflects cautious optimism with an expansion in economic activities, the Stanbic IBTC report suggests that challenges, including inflationary pressures, continue to impact the overall business environment.
