Economic activities in Nigeria have shown a promising turnaround for the first time in over a year, as indicated by the latest report from the Central Bank of Nigeria (CBN). The Purchasing Managers’ Index (PMI) for August 2024, compiled by the CBN’s Statistics Department, reveals an expansion in business activities following 13 consecutive months of contraction.
The composite PMI for August 2024 registered at 50.2 index points, signaling a growth in economic activities. This development is a significant milestone, reflecting cautious optimism across various sectors of the economy.
According to the report, “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.”
Key Drivers of Economic Growth
The PMI survey, conducted from August 12 to 16, 2024, provides insights into the performance of key sectors, including Industry, Services, and Agriculture. A PMI reading above 50 typically indicates expansion, while a figure below that mark signifies contraction.
The August PMI report highlights that the economic upturn was primarily driven by improvements in output, new orders, and the stock of raw materials. The survey results showed:
• Output: 50.8 points
• New Orders: 50.5 points
• Stock of Raw Materials: 51.3 points
All these indicators reflect positive growth trends. However, employment levels continued to decline, registering 48.7 points in August, marking the eighth consecutive month of contraction in employment.
Sectoral Performance Overview
While overall economic activity expanded, sectoral performances varied:
• Services Sector: The Services sector continued its expansionary trend for the third consecutive month, with a PMI of 50.7 points. This growth is attributed to increased business activities, new orders, and improved stock levels of raw materials. Notably, the Repair, Maintenance, and Washing of Motor Vehicles subsector led the expansion. However, the Transportation and Warehousing subsector experienced the highest contraction within the sector.
• Agricultural Sector: The Agricultural sector also reported growth for the first time in several months, with a PMI of 50.5 points. Growth was noted in crop production and agricultural support services, while subsectors such as livestock, fishing, and forestry continued to decline.
• Industrial Sector: In contrast, the Industrial sector still faces challenges, with a PMI of 49.2 points, indicating contraction. This marks the seventh consecutive month of contraction in industrial activities, although at a slower rate than in previous months.
The August 2024 PMI report from the CBN reflects a cautiously optimistic outlook for Nigeria’s economy, with signs of recovery emerging after a prolonged period of contraction. While certain sectors are experiencing growth, challenges remain, particularly in employment and industrial activities. Continued monitoring and strategic interventions will be essential to sustain this positive momentum and foster broader economic stability.
