January 27, 2025/CSL Research

The Central Bank of Nigeria (CBN) recently released its Purchasing Managers’ Index (PMI) survey for December 2024, covering three key sectors: Industry, Services, and Agriculture. The composite PMI for December rose to 51 points, signalling an expansion in economic activities after two consecutive months of contraction. A PMI reading above 50.0 indicates growth in business activities, while a score below 50.0 reflects a contraction, and a reading of 50.0 signifies no change.

The December PMI is an improvement from 49.6 in October and 48.9 in November. In December, among the five key PMI indicators, two showed positive trends while three declined. Output level (53.9 points), and new orders (52.5 points) experienced expansion, signalling increased production, likely driven by renewed demand associated with the December festivities. On the other hand, stock of raw materials (49.9 points) and the employment index showed contraction at 49.8 points, indicating challenges in workforce expansion and inventory accumulation.

Also, suppliers’ delivery time slowed further at 45.8 points, attributed to logistical bottlenecks and supply chain delays. The sectoral breakdown of the December PMI revealed notable trends. The Services sector recorded 52.1 points, indicating expansion and a rebound in activity after two months of decline. The Agricultural sector rose to 52.7 points, sustaining growth driven by strong demand for crops, livestock, and agricultural support services.

Meanwhile, the Industry sector stabilized at 50.0 points, halting a ten-month contractionary streak. An analysis of subsectors under the various sectors showed that 21 out of 36 reported growth, with forestry and primary metals leading the expansion.

Conversely, 15 subsectors contracted, with non-metallic mineral products experiencing the sharpest decline. Businesses expressed optimism about macroeconomic conditions, citing expectations of exchange rate stability and increased order volumes. Overall, the December PMI suggests a tentative recovery in Nigeria’s economy, led by agriculture and services. However, challenges such as persistent inflationary pressures, employment difficulties, and structural bottlenecks highlight the fragility of this rebound.

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