Nigeria’s Purchasing Managers’ Index (PMI) for December 2024 rose to 51.0 index points, signaling a possible return to expansion in economic activities after two consecutive months of contraction.
The country’s PMI for November 2024 stood at 48.9 points
Some analysts see the development as a demonstration of possible response of the economy to some policy measures being dished out by the Central Bank of Nigeria (CBN) in recent times.
They further argue that although the impact may not be visible for now, but that it shows that some critical sectors of the economy, particularly, manufacturing, may be gaining some traction, and consequently, the positive response.
Specifically, they say Purchasing Managers’ Index (PMI) hitting 51% in December 2024, in one of the biggest African economies is a significant indicator of the country’s progress in economic health.
PMI is a survey-based indicator that measures the health of a country’s manufacturing sector. It’s calculated based on five key areas: new orders, output, employment, suppliers’ delivery times, and stock of items purchased.
While a PMI reading above 50 indicates expansion, reading below 50 indicates contraction.
The Central Bank of Nigeria (CBN) released the data as part of its monthly Purchasing Managers’ Index (PMI) report for December 2024.
“The composite PMI for December 2024 at 51.0 index point, indicated expansion in economic activities after two consecutive months of contraction,” CBN said.
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The report further showed that 21 subsectors recorded growth during the review month, with the Forestry subsector leading the pack as the highest performing category, an indicator of more activities in the construction and manufacturing industries ocassioned by increased demand for timber and other forestry products.
The agriculture sector also recorded impressive performance, driven by increased investments in food production and export-oriented farming.
Also, trade and small-scale manufacturing activities posted gains, buoyed by improved consumer spending during the holiday at the festive period
Despite the rising overall optimism,15 subsectors reported declines in economic activities.
They include, Nonmetallic Mineral Products, which recorded the highest contraction during the period under review, due to weak demand for construction materials, particularly in regions grappling with infrastructure challenges.
The services sector also experienced a mixed performance, with hospitality and entertainment showing robust growth, while other service-oriented businesses lagged due to lingering inflationary pressures and reduced disposable income.
However, Lagos based analyst, Friday Ameh posited that, while the rise in PMI may be regarded as a welcome development, the economy still remains vulnerable to several headwinds, typified by rising inflation, exchange rate volatility, and infrastructure deficits, which continue to weigh on the overall economic outlook.
The CBN conducted the survey between December 9-13, 2024 with a sample size of 1,900 business enterprises across Nigeria.