The Purchasing Managers’ Index (PMI) Survey report released by Stanbic IBTC Bank Nigeria stood at 49.9 in August 2024, a slight increase from the 49.2 recorded in July 2024. The PMI measures a country’s economic activity and rate of expansion.
A value below 50 represents a decline in private sector activity compared to the previous month, while a value above 50 indicates an increase in private sector activity, and a value of 50 reflects no change.
The PMI value for August showed a 1.4 percent increase compared to the index value for July. However, this modest increase remains below the 50.0 benchmark, indicating that private sector activity is still low, albeit slowly increasing, reflecting an upward trend in private sector output.
Read Also: Prices of selected food items rise in August as unemployment rate hits 5.3% in Q1 2024
This slow rate of increase is due to rising input and manufacturing prices, which led firms to raise their selling prices rapidly. Demand has also remained muted due to increasing inflationary pressures, which have been further exacerbated by a weak currency.
A sector-by-sector disaggregation of the PMI report shows increased activity in the manufacturing, wholesale, and retail sectors, while the agricultural sector experienced a decline.
The modest improvement in economic activity in August suggests a slight enhancement in Nigeria’s business climate. However, the government needs to adopt monetary measures to curb inflationary pressures, stabilize the Nigerian currency and improve security on farms to restore agricultural productivity.
Furthermore, subsidizing critical raw materials and lowering taxes on essential imports would help manufacturing firms maintain profitability without significantly raising their selling prices.
