Nigeria’s Purchasing Managers’ Index (PMI) for December 2024 rose to 51.0 index points, signaling a return to expansion in economic activities after two consecutive months of contraction.
This development demonstrates a gradual recovery trajectory for one of Africa’s largest economies as businesses across various sectors begin to regain momentum.
The Central Bank of Nigeria (CBN) released the data as part of its monthly Purchasing Managers’ Index (PMI) report for December 2024, revealing positive trends across key sectors.
“The composite PMI for December 2024 at 51.0 index point, indicated expansion in economic activities after two consecutive months of contraction,” CBN said.
According to the report, the industry sector, which had been in a contractionary position in November, improved to 50.0 index points, reflecting increased production and business activity.
Sectors Driving Growth
According to the report, 21 subsectors recorded growth during the review month, with the Forestry subsector leading the pack as the highest-performing category.
- The surge in forestry activities highlights the growing demand for timber and other forestry products, driven by the construction and manufacturing industries.
- The agriculture sector also recorded impressive performance, driven by increased investments in food production and export-oriented farming.
Similarly, trade and small-scale manufacturing activities posted gains, buoyed by improved consumer spending during the holiday season.
“21 subsectors reported growth in economic activities with Forestry reporting the highest growth during the review month,” the apex bank noted.
Sectors Facing Declines
Despite the overall optimism, 15 subsectors reported declines in economic activities. Nonmetallic Mineral Products recorded the highest contraction during the period under review. This drop has been attributed 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.
Key Metrics and Insights
The composite PMI score of 51.0 suggests a steady expansion of economic activities, particularly in manufacturing, agriculture, and services.
Analysts view the improvement as a reflection of better operating conditions, a more stable exchange rate environment, and increased consumer demand.
The industrial sector’s rise to 50.0 index points is another critical indicator of recovery, suggesting that manufacturing activities are gradually picking up. However, the uneven performance across subsectors shows the need for targeted interventions to sustain growth and address structural bottlenecks.
Challenges and Opportunities
While the positive PMI data is a welcome development, Nigeria’s economy remains vulnerable to several headwinds.
Persistent inflation, exchange rate volatility, and infrastructure deficits continue to weigh on the overall economic outlook.
The decline in Nonmetallic Mineral Products demonstrates the urgent need for renewed investments in the construction and mining sectors, which are critical to Nigeria’s diversification efforts.
What you should know
Nigeria’s PMI for November 2024 stood at 48.9 points
The CBN conducted the survey between December 9-13, 2024 with a sample size of 1,900 business enterprises across Nigeria.
PMI is an indicator of the prevailing direction of economic trends across sectors including the manufacturing and service sectors.
