The Central Bank of Nigeria, CBN, yesterday released the Purchasing Managers Index, PMI report for July which showed contractions in economic activities for the 13th consecutive months.
The CBN explained that PMI is based on a survey of Purchasing and Supply Executives, of respondents firms drawn from the three sectors of the economy, namely: Agriculture, Industry, and Services. The PMI is computed based on responses regarding the direction of change in different aspects of respondents' business activities. An index above 50.0 points indicates an expansion in business activities while below 50.0 points indicates a contraction in business activities. An index of 50.0 indicates a no-change situation.
According to the PMI report for July, "In July 2024, the composite PMI stood at 49.7 points indicating contraction in economic activities for the thirteenth consecutive month. "However, the index shows improvement compared to the 48.8 points recorded in the previous month. Furthermore, Output Level, Suppliers' Delivery Time and Stock of Inventory expanded. New Orders and Employment contracted at a slower rate compared to the levels recorded in the previous month.
Sectoral breakdown
The sectoral breakdown shows that the Services Sector recorded expansion for the second consecutive month while the Industry and Agricultural Sectors registered slower contraction when compared to the level recorded in the previous month. Within the Industry Sector, the Manufacturing, Construction and Mining & Quarrying; Electricity, Gas & Water Supply Subsectors all recorded contractions in the review month.
Output
"The Composite Output Index stood at 50.3 points in July 2024, indicating growth in production level for the first time after five consecutive months of contraction. "Of the 36 subsectors reviewed, 16 subsectors reported growth in production during the review month, while 17 subsectors registered a decline with Transportation Equipment reporting the highest decline. The remaining three subsectors were stationary.
New orders
"In July 2024, the composite level of New Orders index at 48.8 points, indicated contraction in the volume of new incoming businesses/orders. Of the 36 subsectors reviewed, 25 subsectors reported declines in New Orders with Chemical & Pharmaceutical Products recording the highest decline.
"While 9 subsectors reported increased level of New Orders in the review month, Cement and Forestry however, were stationary
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Employment index
"At 48.7 index points, the composite Employment Level indicated contraction in July 2024 for the seventh consecutive month (Fig. 7). "The index improved in July 2024 when compared to the 48.3 points recorded in the previous month. Eighteen subsectors reported a contraction in Employment, with Printing & Related Support Activities recording the highest decline in the review month.
Primary Metal subsector remained unchanged, while the remaining 17 subsectors reported increased Employment Levels with Petroleum & Coal Products subsector having the higher Employment Level."
Prices
"Composite Input and Output Prices In July 2024, both the overall input and output prices decreased compared to June 2024. However, the overall output price was lower than the overall input price. "The output prices of the Industry, Services, and Agriculture sectors were lower than those recorded in June 2024. For input prices, Agriculture and Services sectors prices were lower than the level in June, while Industry sector price was higher in July."
