Nigeria’s economic activities expand after 13 months of contraction – CBN report

Nigeria’s economic activities showed signs of recovery in August, marking the first expansion after thirteen consecutive months of contraction.

The Purchasing Managers’ Index (PMI) for the month, a gauge for the direction of economic activities in Nigeria, stood at 50.2 points, just above the threshold that separates growth from decline.

This was disclosed by the Central Bank of Nigeria (CBN) in its August PMI survey report released on Thursday.

The PMI survey, conducted between August 12-16, involved purchasing and supply executives from three key sectors of the economy: Industry, services, and agriculture.

An index above 50.0 points signals an expansion in business activity, while a figure below 50.0 indicates a contraction.

According to the report, the marginal rise in the composite PMI from the previous month’s figure signals cautious optimism in Nigeria’s economic trajectory.

This modest growth, it said, was driven by a combination of factors, including the expansion in Output (50.8), New Orders (50.5), and Stock of Raw Materials (51.3). However, the employment Index at 48.7 points continues to highlight weaknesses in the labour market.

Sectoral breakdown

The breakdown shows that the services sector continued its positive momentum, recording expansion for the third consecutive month.

“In August 2024, the services sector index stood at 50.7 points, indicating expansion for the third consecutive month. This growth is driven by increased business activity, higher stock levels of raw materials, and a rise in incoming business opportunities.

“Among the 14 subsectors surveyed, six recorded growth, seven experienced declines, and the wholesale trade subsector remained stationary. Notably, the repair, maintenance, and washing of motor vehicles subsector saw the highest expansion, while transportation and Warehousing faced the most significant contraction,” it said.

The agriculture sector index inched up to an expansionary level of 50.5 points in August, signalling a recovery after three consecutive months of contraction in economic activities.

Among the five surveyed subsectors, crop production and agricultural support services recorded expansion in the review month, while livestock, fishing/fish farming and forestry recorded declines

However, the Industry sector remained in contraction, though at a reduced pace, standing at 49.2 points and marking the seventh straight month of decline.

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According to the report, the figure indicates some improvement since March, signalling a gradual recovery in industrial activities despite ongoing challenges.

Subsector analysis shows expansions in mining, quarrying, electricity, gas, and water supply, as well as construction, while the manufacturing subsector saw a decline in August.

Across the 36 subsectors surveyed, 17 reported growth, with primary metal leading the charge. In contrast, 19 subsectors registered declines, with forestry experiencing the sharpest downturn.