PMI: Economic Activities Declined in July, Contracted for 13th Consecutive Month

James Emejo in Abuja

The composite Purchasing Manager’s Index (PMI) stood at 49.7 points in July 49.7 points.

The performance indicates  a contraction in economic activities for the 13th consecutive month.

According to the PMI Survey Report released by the Central Bank of Nigeria (CBN) for the period under review, the index however showed improvement compared to the 48.8 points recorded in the previous month.

The report pointed out that new orders and employment contracted at a slower rate compared to the levels recorded in June.

The sectoral breakdown also showed 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.

The index gauges the direction of economic activities in the country for a specific month.

The survey respondents were the company’s purchasing and supply executives, drawn from three sectors of the economy, including agriculture, industry, and services.

According to the report, PMI within industry, manufacturing, construction and mining & quarrying; electricity, gas & water supply sub-sectors all recorded contractions in the review month.

However, 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.

The survey stated that of the 36 sub-sectors reviewed, 16 reported growth in production during the review month, while 17 sub-sectors registered a decline with transportation equipment reporting the highest decline while the remaining three sub-sectors were stationary.

The PMI also put the composite level of new orders index at 48.8 points, which indicated a contraction in the volume of new incoming businesses/orders.

The report noted that of the 36 sub-sectors reviewed, 25  reported declines in new orders with chemical and pharmaceutical products recording the highest decline while nine sub-sectors reported increased levels of new orders in the review month.

It added that cement and forestry, however, remained stationary.

In addition, at 48.7 index points, the composite Employment Level indicated contraction in July for the seventh consecutive month.

The index, however, improved in the review period when compared to 48.3 points recorded in the previous month.

Also, 18 subsectors reported a contraction in employment, with printing and related support activities recording the highest decline in the review month.

Primary metal subsector remained unchanged, while the remaining 17 sub-sectors reported increased employment levels with petroleum and coal products subsector having the higher employment level.

Essentially, 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.