November 14, 2024/CSL Research

The Central Bank of Nigeria (CBN) recently released the Purchasing Managers’ Index (PMI) survey for October 2024, covering three key sectors: Industry, Services, and Agriculture. The October 2024 composite PMI score was 49.6 points, indicating a contraction in economic activities. Typically, an index above 50.0 points signals an expansion in business activities, while a reading below 50.0 points indicates a contraction. The October composite PMI at 49.6 points reflects a drop in economic activities from previous expansion readings of 50.2 points in August 2024 and 50.5 points in September 2024.

Across the PMI indicators for the month, output level expanded at 50.7 points, same as in September 2024. New orders also recorded an expansion at 50.2 points but slowed compared
to 52.2 points in the previous month. This indicates renewed demand challenges from businesses and consumers in reaction to price upticks. Employment level at 49.3 points (an improvement from the prior month at 49.1 points) showed relative stability in the labour market while suppliers’ delivery time (47.1 points) and stock/inventory of raw materials (49.7 points) showed contractions when compared to September figures of 48.4 points and 51.4 points respectively. Furthermore, the Agriculture sector registered expansion in the month under review with a sector PMI of 50.3 points while the Services sector remained unchanged at 50.0 points. Conversely, Industry (49.3 points) remained in contraction, with the food, beverage & tobacco products subsector recording the highest contraction.

Notably, output levels declined across all sectors except agriculture, where recent harvests have had a positive impact. The sharp drop in the stock/inventory of raw materials index to 49.7 points raises concerns for overall production levels and composite output in the near term as the inflation outlook suggests elevated prices will persist, translating to sustained high purchase costs. Additionally, the industry sector PMI at 49.3 points highlights ongoing pressures within manufacturing, where high funding and energy costs, combined with escalating import costs due to significant domestic currency depreciation, continue to challenge producers. These factors pose concerns for the near- to mid-term economic recovery of the real sector.

CSL Nigeria Daily – 14 November 2024 – PMI.pdf​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​