Nigeria’s economic activity rose in December as the Purchasing Managers’ Index (PMI) expanded to 51.0 index, according to the Central Bank of Nigeria’s (CBN) report.
The increase follows previous months of contraction with the PMI standing at 48.9 in November.
A PMI above 50 indicates expansion while a reading below 50 signifies contraction.
The CBN’s report showed that the industry sector which contracted in November improved to 50.0 index points in December.
The report revealed that 21 subsectors recorded growth during the review month with the forestry subsector leading as the highest-performing category.
This surge in forestry activities indicated growing demand for timber and related products, driven by the construction and manufacturing industries.
The agriculture sector also posted strong growth bolstered by increased investments in food production and export-oriented farming.
While trade and small-scale manufacturing activities recorded gains on the back of improved consumer spending during the holiday season.
However, 15 subsectors reported declines in productivity.
The non-metallic mineral products subsector recorded the highest contraction due to weak demand for construction materials.
Also, the services sector presented 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.
Analysts view the improvement as a reflection of better operating conditions, a more stable exchange rate environment and increased consumer demand.
However, the uneven performance across subsectors indicates the need for targeted interventions to sustain growth and address structural bottlenecks.
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.
The December PMI survey was conducted between December 9 and 13, 2024 with a sample size of 1,900 business enterprises across Nigeria.
The PMI serves as an indicator of the prevailing direction of economic trends across sectors, including manufacturing and services.