Nigeria’s business activity index breaks 13-month losing streak- CBN

Business a.m.

After a prolonged period of contraction lasting 13 consecutive months, the Nigerian economy finally experienced a turning point in August 2024, with businesses registering an expansion in economic activities, according to the Central Bank of Nigeria’s (CBN) recent Purchasing Managers’ Index (PMI) report.

The PMI data for August 2024 indicated an upturn in the country’s economic situation, with the composite index reaching 50.2 points—the first time since the beginning of the contraction that economic activities expanded.

Among the 36 sub-sectors reviewed across the Industry, Services and Agriculture Sectors, 17 sub-sectors reported growth with Primary Metal reporting the highest growth during the review month.

The sectoral analysis of the CBN’s latest PMI report revealed that the Services sector continued its growth trajectory, expanding for the third consecutive month. At the same time, the agricultural sector, which had previously been in contraction, reversed its trend and experienced expansion for the first time in many months.

The business activity index, which measures overall conditions in the Services Sector, recorded a positive index value of 51.3 points in August 2024. This marks the third consecutive month of growth, reinforcing the trend of improving conditions within the sector.

The industry sector, on the other hand, remained in contraction. However, the rate of contraction slowed down compared to the previous month.

Despite the positive developments in some sectors, the majority of the 19 sub-sectors recorded a decline in economic activity, with Forestry experiencing the steepest drop.

However, the report revealed signs of growth in key areas such as output, new orders, and stock of raw materials, with indices measuring these areas registering 50.8, 50.5, and 51.3 points, respectively. The suppliers’ delivery time remained stagnant at 50.0 points, while employment saw a decline at 48.7 points.

Although the composite output index indicated that production levels grew for the second consecutive month, reaching 50.8 points, the sectoral performance was mixed, with a significant disparity between the sub-sectors.

Of the 36 sub-sectors reviewed, 19 sub-sectors reported growth in production in August 2024, with primary metal registering the most significant expansion. However, 14 sub-sectors reported a decline in production, with non-metallic mineral products recording the sharpest drop.

Despite the relatively stagnant performance of fabricated metal products, electricity, gas, steam, and air conditioning supply, and utilities sub-sectors in August 2024, the composite level of new orders index indicated an overall expansion in incoming businesses and orders across Nigerian industries.

The analysis of the 36 sub-sectors showed that 15 recorded growth in levels of new orders, with primary metals leading the way in terms of growth.

While the plastics and rubber products, as well as the transportation equipment sub-sectors, remained unchanged in terms of new orders in August 2024, the remaining 19 sub-sectors recorded lower levels of new orders.

The report noted: “Out of the 14 sub-sectors surveyed, nine reported expansions, the Utilities sub-sector remained stationary and the remaining four sub-sectors reported contractions.

“The repair, maintenance, and washing of motor vehicles sub-sector saw the highest growth, whereas professional, scientific, and technical services recorded the most significant decline.”