Economic activities in Nigeria have shown signs of recovery after over a year of decline, as revealed by the Central Bank of Nigeria’s (CBN) latest report. According to the Purchasing Managers’ Index (PMI) for August 2024, business activities expanded for the first time in 13 months, signaling a cautious yet hopeful shift in the nation’s economic landscape.
The PMI, which serves as a key indicator of economic health, rose to 50.2 index points in August 2024, suggesting a return to growth after consecutive months of contraction. This development highlights a significant milestone for the Nigerian economy, reflecting improving conditions across various sectors.
“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,” the report stated.
Growth Driven by Rising Output, New Orders, and Raw Material Stocks
The survey, conducted between August 12 and 16, 2024, offers a snapshot of key economic sectors, including Industry, Services, and Agriculture. A PMI above 50 points generally signals economic expansion, while figures below that mark reflect contraction.
In August, Nigeria’s economic rebound was fueled by increases in output, new orders, and raw material stocks. The PMI report indicated that output rose to 50.8 points, new orders to 50.5, and raw material stocks to 51.3, all pointing to renewed growth in business activity.
However, employment levels continued to lag behind, falling to 48.7 points in August, marking the eighth straight month of contraction in the labor market.
Mixed Sectoral Performance
While the overall economy saw improvement, sectoral performances remained uneven. The Services sector continued to expand for the third consecutive month, posting a PMI of 50.7 points. Growth in this sector was driven by increased business activity, new orders, and higher stock levels of raw materials, with the Repair, Maintenance, and Vehicle Washing subsector leading the charge. However, the Transportation and Warehousing subsector faced the sharpest contraction within this category.
The Agricultural sector also recorded its first growth in several months, with a PMI of 50.5 points. Subsectors like crop production and agricultural support services contributed to this rise, though areas such as livestock, fishing, and forestry continued to experience declines.
The Industrial sector, however, remains under pressure. Its PMI stood at 49.2 points, reflecting a contraction for the seventh consecutive month. While still in decline, the rate of contraction in industrial activity slowed compared to previous months.
What You Should Know
While the CBN report places Nigeria’s August PMI at 50.2, a separate report by Stanbic IBTC suggests a marginally different figure. According to Stanbic, Nigeria’s PMI rose to 49.9 in August, up from 49.2 in July. The report noted slight improvements in business conditions, though ongoing inflationary pressures continued to hinder growth.
Stanbic IBTC’s findings highlight that while new orders experienced a modest uptick, the overall business activity saw a slight decline, underscoring the mixed nature of Nigeria’s economic recovery.
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In sum, Nigeria’s economy is cautiously navigating its way out of a prolonged slump, with sectors showing varying degrees of recovery amidst inflationary challenges.
