Nigeria records 13th consecutive monthly economic contraction, says CBN

The Central Bank of Nigeria (CBN) said the Purchasing Managers’ Index (PMI) reading stood at 49.7 points in July, indicating a contraction in economic activities for the 13th consecutive month.

This position is contained in the July PMI report released by the apex bank yesterday. The CBN, however, said the index shows improvement compared to the 48.8 points recorded in the previous month.

It noted that output level, suppliers’ delivery time and stock of inventory expanded while new Orders and employment contracted at a slower rate compared to the levels recorded in the previous month.

The index, which measures the performance of business activities, is based on the change in different aspects of respondents’ business activities. An index above 50 points indicates an expansion in business activities while below points to a contraction in business activities.

The sectoral breakdown shows that the services sector recorded expansion for the second consecutive month, while industry and agricultural sectors registered slower contraction when compared to the level recorded in the previous month.

Within the industry sector, the report said, manufacturing, construction and mining and quarrying; electricity, gas and water supply sub-sectors recorded contractions in the review month.

According to the report, 25 subsectors reported a decline in new orders with pharmaceutical products reporting the highest drop. Nine subsectors reported an increased level of new orders, but cement and forestry remained unchanged, according to the index.

Eighteen sectors out of the 25 reported a contraction in employment levels with printing activities recording the highest decline while the petroleum and coal subsectors had the highest employment levels.

“At 48.7 index points, the composite employment level indicated contraction in July 2024 for the seventh consecutive month. The index improved in July 2024 when compared to the 48.3 points in June 2024,” it stated.

Nigeria has been facing a consistently high inflation and unstable exchange rate that has left many businesses comatose. While many manufacturing companies have already shut down, others have scaled down their operations as they struggle with rising inventory.