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•Manufacturing, agriculture drive growth
From Adanna Nnamani, Abuja
Nigeria’s private sector sustained its growth momentum in October, recording a fifth consecutive month of expansion as stronger performances in agriculture and industry offset a slowdown in services, despite rising production costs.
The latest Purchasing Managers’ Index (PMI) report released by the Central Bank of Nigeria (CBN) showed that the composite PMI increased marginally to 53.2 points in October from 53.0 points recorded in September.
The reading, which remained above the 50-point benchmark separating expansion from contraction, indicated continued improvement in overall business conditions during the month. However, the marginal increase in business activity came amid rising input and output prices, suggesting that businesses continued to contend with cost pressures even as production and employment improved.
According to the report, the composite output index rose to 54.6 points in October from 53.9 points in the preceding month, while the employment index increased to 53.2 points from 51.5 points.
The improvement in employment suggests that businesses increased their workforce during the review period, reflecting stronger operational activities across several sectors.
However, the new orders index, which provides an indication of future business activity, declined to 52.8 points from 53.7 points in September.
Similarly, the stock of raw materials index moderated to 51.9 points from 52.1 points, although it remained within expansion territory.
New export orders improved from 48.2 points to 48.8 points, while new import orders rose from 47.9 points to 49.0 points. Both indicators, however, remained below the 50-point threshold, reflecting continued weakness in external trade-related business activities.
The CBN explained that a PMI reading above 50 points indicates expansion in business activities, while a reading below the benchmark signals contraction. An index of exactly 50 points represents no change.
A sectoral breakdown of the October report showed that agriculture recorded the strongest performance, followed by services and industry, although manufacturing and other industrial activities recorded improvements during the month.
The agriculture PMI rose to 54.7 points from 53.1 points in September, sustaining the sector’s expansion for the 27th consecutive month.
All five agriculture subsectors recorded growth, while the general farming activities index increased to 56.8 points from 54.6 points.
The sector’s new orders index also improved to 55.6 points from 54.4 points, while employment rose to 52.9 points from 51.4 points.
Raw materials inventory increased to 53.6 points from 52.1 points, indicating improved stock levels among agricultural businesses.
Among the agriculture subsectors, livestock recorded the strongest performance with a PMI of 56.4 points, followed by forestry at 55.3 points. Agricultural Support Services recorded the lowest reading at 52.0 points, although it remained in expansion territory.
The industrial sector also sustained its recovery, with its PMI rising to 52.6 points in October from 52.0 points in September, marking the third consecutive month of expansion.
All five component indices used to measure industrial activities remained above the 50-point benchmark, indicating improvements in production, new orders, employment, raw materials inventory and suppliers’ delivery time.
The industry output index increased to 53.5 points from 53.2 points, while new orders rose to 52.1 points from 51.7 points.
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Employment improved to 52.7 points from 51.1 points, while raw materials inventory increased to 51.8 points from 51.1 points.
Suppliers’ delivery time stood at 52.6 points, compared with 52.7 points in September.
Of the 16 industrial subsectors monitored, 12 recorded expansion, while four contracted.
Cement manufacturing emerged as the best-performing industrial subsector, recording a PMI of 60.2 points, while Chemical and Pharmaceutical Products recorded the weakest performance at 43.4 points.
The services sector, however, recorded a slight moderation in growth, with its PMI declining to 52.7 points in October from 53.2 points in September.
Despite the decline, the sector maintained its expansion for the fourth consecutive month, supported by improvements in output, employment, new orders and inventories.
Business activity stood at 54.2 points, while employment increased to 53.5 points. New orders and inventories recorded 51.7 points and 51.1 points respectively.
Seven of the 11 services subsectors expanded during the month, while four contracted.
Educational Services recorded the strongest performance with a PMI of 60.2 points, while Arts, Entertainment and Recreation recorded the weakest reading at 47.1 points.
Beyond the improvement in output and employment, the report highlighted persistent cost pressures across the economy, with both input and output price indices recording increases.
The composite input price index rose to 64.0 points in October from 63.3 points in September, while the output price index increased to 58.9 points from 58.4 points.
The development indicates that businesses continued to experience higher costs for materials and other inputs, with some of the pressure reflected in the prices of goods and services.
Agriculture recorded particularly strong increases in both measures. Its input price index rose to 68.3 points from 65.8 points, while the output price index increased to 61.1 points from 58.5 points.
In the services sector, the input price index increased to 62.8 points from 62.0 points, although the output price index declined to 58.4 points from 59.3 points.
The October report further showed that 24 of the 32 subsectors monitored recorded expansion, while eight contracted, underscoring the broad-based nature of the improvement in business activities.
The survey, which covered 1,851 responses from purchasing and supply executives across the agriculture, industry and services sectors, provides an indication of prevailing business conditions in the Nigerian economy.
Overall, the October figures point to sustained private sector expansion, supported by stronger agricultural and industrial activities and improved employment conditions.
However, the increase in production costs, coupled with the moderation in new orders, suggests that businesses may continue to face pressure in sustaining the pace of growth if input prices remain elevated.
