The Central Bank of Nigeria (CBN) published a new report on the Purchasing Managers’ Index (PMI) for July 2024. The report shows that the Composite Employment Index has declined for the past seven months, which indicates persistent difficulties in the job market. The report showed that the composite employment level contracted for the seventh straight month, with the index at 48.7 points in July 2024. However, this marked an improvement from the 48.3 points reported in the previous month.
Also, the report stated that eighteen subsectors experienced employment contractions, with Printing & Related Support Activities showing the largest decline during the review month. On the other hand, the Primary Metal subsector maintained its stability with no fluctuations in employment numbers. In contrast, 17 other subsectors experienced employment growth, especially the Petroleum & Coal Products subsector. Businesses are struggling to keep up with the demands of a challenging economic climate, as evidenced by the ongoing decrease in employment levels.
Industrial sector has the most drop, with the index at 47.0 points.
Furthermore, the slight increase in the index indicates a gradual recovery, highlighting the importance of implementing focused economic measures to encourage job growth and assist industries struggling with major employment difficulties. The PMI is a crucial economic indicator encompassing manufacturing, services, and agriculture, showing a marginal employment improvement. Despite this improvement, the data signal a continued decline in employment levels within these sectors. A recent report noted that although overall economic activity increased slightly, employment growth is struggling to match up.
However, the most significant decrease was seen in the industrial sector, with the employment index falling to 47.0 points. This decline is due to a continuous decrease in employees across various subsectors, such as Printing & Related Support Activities and Primary Metal. Within services, employment levels held steady at 50.0 points, showcasing a mixed bag of growth and decline across various subsectors. As indicated by the index of 47.8 points, employment in the agricultural industry continued to decrease due to solid declines in the Fishing/Fish Farming and Livestock subsectors.
National economy has declined for 13 consecutive months since June 2023.
Moreover, the latest Unemployment report from the National Bureau of Statistics (NBS) shows that the nation’s unemployment rate increased to 5.0% in the third quarter of 2023, up from 4.2% in the previous quarter, highlighting the country’s ongoing struggles with employment. The country’s Q3 2023 labour force participation rate was 79.5%, a decrease from the previous quarter’s 80.4%. The unemployment rate was higher in urban areas, at 6.0% than in rural areas, at 4.0%. Men had a participation rate of 80.9%, while women had a rate of 78.2%.
In July, the Central Bank of Nigeria’s PMI report revealed a consistent decrease in economic activities, making it the 13th month in a row with a decline since June 2023. The report shows that the PMI for July was at 49.7 points, indicating a contraction in economic activities for the month. However, this was a slight improvement from June’s 48.8 points. The PMI is derived from respondents’ feedback on shifts in various business activities. A PMI above 50.0 indicates business expansion, while a reading below 50.0 suggests contraction.
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An index of exactly 50.0 signifies stability, with no change in business activity. The PMI is a crucial gauge of business conditions and broader economic trends, reflecting activity-level shifts. According to the report, last month’s rise in PMI was driven primarily by increased production, quicker supplier delivery times, and higher inventory levels. This positive movement occurred despite declines in new orders and employment, highlighting resilience in specific sectors that contributed to the overall improvement in business activity during the review period.