The Central Bank of Nigeria (CBN) has reported that economic activities in the country have continued to contract, marking the 13th consecutive month of decline since June 2023.
Specifically, the bank noted that Nigeria’s economy contracted to 49.7 points in July 2024, although this represents a slight improvement compared to the 48.8 points recorded in June.
This was disclosed on Wednesday in the newly released Purchasing Managers’ Index (PMI) report for July 2024.
On Tuesday, the apex bank reinstated the publication of several key economic reports, reaffirming its commitment to fostering transparency and accountability in the Nigerian economy.
These reports include the Purchasing Managers’ Index, Business Expectation Survey, Inflation Expectation Report, and other macroeconomic indicators.
According to the report, the PMI for the month stood at 49.7 points, signaling a contraction in economic activities during the month, but an improvement from June, which stood at 48.8 points.
The PMI is calculated based on responses about the direction of change in various aspects of respondents’ business activities.
An index above 50.0 points signals an expansion in business activities, while an index below 50.0 points indicates a contraction. An index of exactly 50.0 points reflects no change in business activity.
The report noted that the increase in PMI for the month was driven by expansion in output levels, suppliers’ delivery times, and stock of inventory, while new orders and employment contracted during the period.
It stated, “In July 2024, the composite PMI stood at 49.7 points, indicating contraction in economic activities for the 13th consecutive month. However, the index shows improvement compared to the 48.8 points recorded in the previous month.
“Furthermore, Output Level, Suppliers’ Delivery Time, and Stock of Inventory expanded. New Orders and Employment contracted at a slower rate compared to the levels recorded in the previous month.”
The report indicated that the services sector experienced expansion for the second consecutive month, while the industry and agricultural sectors saw a slower rate of contraction compared to the previous month.
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Within the industry sector, manufacturing, construction, mining, and quarrying, as well as the electricity, gas, and water supply subsectors, all recorded contractions during the review month.
The report for July 2024 indicated that the industry sector PMI, at 48.3 points, marked its sixth consecutive month of contraction. However, there was an improvement in industrial activities, as reflected in higher production levels and faster suppliers’ delivery times compared to June 2024.
The manufacturing; mining, quarrying, electricity, gas, and water supply; and construction subsectors all registered declines in July 2024.
Among the 17 subsectors surveyed, 11 recorded contractions, while the remaining six experienced expansion.
The subsectors with the most significant contraction and expansion were transportation equipment and furniture & related products.
The report indicated that the services sector index in July 2024, at 50.3 points, showed expansion for the second consecutive time since May 2023.
Growth was observed in business activity and stock of raw materials inventory, while the level of new orders declined, and employment levels remained unchanged during the review month.
Of the 14 subsectors surveyed, eight recorded growths, while six reported declines.
The motion pictures, cinema, sound recording, and music production subsector registered the highest expansion, while the management of company’s subsector experienced the most significant contraction.
The report showed that the agriculture sector index was at 49.7 points in July 2024, signaling a contraction in economic activities for the third consecutive month. Despite this, there was growth in general farming activity and the stock of agricultural inventory.
However, new orders and employment levels saw a decline. Among the five subsectors surveyed, livestock, fishing/fish farming, and agricultural support services recorded contractions during the review month.
Checks by our correspondent showed that the CBN Purchasing Managers’ Index for July aligns with that of Stanbic IBTC, both indicating a contraction in economic activities for the month.
The Stanbic PMI noted that exchange rate weakness was negatively affecting new orders for businesses, leading to high prices.
Businesses in Nigeria’s real economy have had to contend with nearly three-decade high inflation, coupled with the depreciation of the naira, a decline in consumer demand, and increased operational costs.
However, despite these economic challenges, the Nigerian economy has shown resilience, posting a growth of 2.92 percent in the first quarter of the year, close to earlier projections of between 3.0 percent and 3.3 percent in 2024.
