Nigeria’s economy shows growth for the second month in a row, with a PMI of 50.2 points in January 2025. Key sectors like agriculture and industry reported expansions, despite a contraction in services. Notably, transportation equipment saw the highest growth, while forestry experienced significant decline. Overall, the PMI serves as an essential indicator of economic activity in the country.
The Central Bank of Nigeria (CBN) reports that the Purchasing Managers’ Index (PMI) for January 2025 is at 50.2 points, indicating a growth streak in economic activities for two consecutive months. This growth is prevalent in key sectors like industry and agriculture, although the services sector has shown a contraction in its performance.
The PMI breakdown reveals that the composite output is marked at 50.9 points, while new orders and employment levels matched at 50.2 points, suggesting overall economic expansion during the reporting period. However, a decline was noted in the composite stock of raw materials, which fell to 49.8 points, alongside a decrease in suppliers’ delivery times, now at 49.6 points, indicating supply chain challenges.
Analysis of 36 sub-sectors from industry, services, and agriculture shows mixed results, with 17 sub-sectors recording growth, and the transportation equipment sub-sector leading this expansion. Conversely, the same number reported declines, with forestry reflecting the largest contraction. Only two sub-sectors remained stable throughout the review.
In the industrial sector, the PMI indicates 10 of 17 sub-sectors surveyed expanded, while 6 reported contractions. The plastic and rubber products sub-sector remained steady. Transportation equipment showed significant positive growth, whereas the non-metallic mineral products sub-sector saw severe contractions. Overall, the industry sector index stands at 51.3 points, confirming expansion in industrial activities
Further analysis highlights growth in output and employment levels, recorded at 54.0 and 52.4 points respectively, whereas new orders and stock of raw materials decreased to 49.6 points. The slow pace of suppliers’ delivery times persisted at 49.6 index points. In contrast, the services sector faced a contraction, reflected in its PMI of 48.6 points with only three of 14 sub-sectors showing growth.
The agriculture sector continues to thrive with an index of 52.5 points, signaling expansion. Out of five surveyed sub-sectors, four reported growth, led by crop production, while forestry suffered a decline. Key metrics within agriculture, including output, new orders, employment, and stock of raw materials, all exhibited positive trends, standing at 51.8, 54.3, 51.3, and 52.4 index points respectively.
The Purchasing Managers’ Index (PMI) serves as a vital economic indicator, based on business responses to operational changes. A PMI above 50.0 suggests expansion, below indicates contraction, and exactly 50.0 points denotes stability in the economy.
In conclusion, Nigeria’s economy is witnessing modest growth, particularly in industry and agriculture, indicated by a PMI of 50.2 points for January 2025. While many sectors are expanding, the services sector is seeing declines, particularly in transportation and warehousing. PMI remains a crucial barometer for assessing economic performance, marking expansion when above 50.0 points.
Original Source: businessday.ng
