‘Industrial sector contracted, service industry expanded’ — highlights of CBN’s PMI report

To enhance transparency, promote informed decision-making and support economic growth, the Central Bank of Nigeria (CBN) has reintroduced the purchasing managers’ index (PMI).

CBN published the PMI report for July 2024 on August 15.

PMI is an indicator of the general direction of economic trends in the manufacturing and service sectors.

The apex bank said the PMI survey was conducted from July 15-19, to gauge the direction of economic activities in Nigeria for the month.

“The survey respondents were the company’s Purchasing and Supply Executives, drawn from the three sectors of the economy, namely: Agriculture, Industry, and Services,” CBN said.

Here are the highlights of the report.

INDUSTRY SECTOR PMI

In the report, the apex bank said the industry sector PMI stood at 48.3 points in July, recording the sixth consecutive month of contraction.

The CBN said 11 industrial subsectors recorded contraction while the remaining six sub-sectors recorded expansion in the month under review.

“Similarly, the Manufacturing; Mining, Quarrying, Electricity, Gas, and Water Supply; and Construction subsectors registered declines in July 2024,” the CBN said.

“Of the 17 subsectors surveyed, 11 subsectors recorded contraction while the remaining six subsectors recorded expansion in the month under review.

“The sub-sectors with the highest contraction and highest expansion are transportation equipment and furniture and related products.”

Despite the industrial sector’s contraction, CBN said industrial activities improved due to higher production level and faster suppliers’ delivery times compared to June.

NEW ORDERS INDEX REGISTERS SLOWER CONTRACTION

According to the CBN, the new orders index at 45.7 points in July, indicated a slower contraction of incoming businesses/orders.

“The cement subsector reported stationary level of New Orders while the remaining 16 subsectors reported declines in New Orders in the review month,” the apex bank said.

RAW MATERIALS LEVEL GREW IN JULY

In July, CBN said the industry stock of raw materials stood at 49.5 points — indicating growth in the stock of industrial sector raw materials level.

“Among the 17 subsectors, seven reported declines in stock levels of which Transportation Equipment recorded the highest growth, five maintained a stationary level, and five experienced growth in their stock levels with Furniture & Related Products subsector recording the highest decline,” the PMI report reads.

“At 50.8 points, the time required to deliver raw materials ordered by industrial firms in July 2024 was shorter.

“Of the 17 subsectors surveyed, seven subsectors reported shorter delivery time with Cement recording the shortest time, while Primary Metal reported the same delivery time.”

The apex bank said the remaining nine subsectors reported shorter delivery time — of which petroleum and coal products recorded the shortest delivery time.

SERVICES SECTOR PMI

CBN said the services sector index at 50.3 points indicated expansion in the sector for the second consecutive time since May 2023.

The financial regulator said the business activity and stock of raw materials inventory recorded growth.

According to the apex bank, the level of new orders recorded declined while the employment level remained unchanged in the review month.

The apex bank said among the 14 subsectors surveyed, eight subsectors recorded growth while the remaining six reported declines.

“The Motion Pictures, Cinema, Sound recording, and Music production subsector registered the highest expansion, while Management of Companies registered the worst contraction,” CBN said.

AGRICULTURE SECTOR PMI

In the report, the apex bank said the agriculture sector index stood at 49.7 points in July, indicating a contraction in economic activities for the third consecutive month.

“Despite this, General Farming Activity and the Stock of Agricultural Inventory reported growth. However, New Orders and Employment Levels declined,” the report said.

CBN said among the five surveyed subsectors, livestock, fishing/fish farming and agricultural support services recorded contraction in the review month.

The last publication of the PMI was on December 23, 2020.