BUSINESS activities in Nigeria strengthened in October as the Purchasing Managers’ Index (PMI) rose to 53.2 points from 53.0 points in September, extending the private sector’s expansion for the fifth consecutive month.
The latest PMI report by the Central Bank of Nigeria (CBN), released on Thursday, showed that 24 of the 32 subsectors surveyed recorded expansion, indicating that the improvement in economic activities was spread across major segments of the economy.
A PMI reading above the 50-point threshold indicates expansion, while a reading below 50 points signals contraction.
The improvement was driven largely by stronger performances in agriculture and industry, where business activities gained momentum, supported by increased production, new orders and employment.
The industrial PMI rose to 52.6 points in October from 52.0 points in September, while agriculture recorded a stronger increase to 54.7 points from 53.1 points.
However, the services sector recorded a moderation, with its PMI declining to 52.7 points from 53.2 points in the preceding month, although it remained in expansion territory for the fourth consecutive month.
Within the industrial sector, manufacturing activity improved as the Manufacturing PMI increased to 52.4 points from 51.7 points, reflecting stronger performances in cement, motor vehicles and assembly, and oil refining.
The report showed that manufacturing production rose to 53.5 points from 53.2 points, while the new orders index increased to 52.1 points from 51.7 points.
Employment also improved significantly, with the index rising to 52.7 points from 51.1 points, suggesting increased demand for labour among businesses.
Raw materials inventory increased to 51.8 points from 51.1 points, while suppliers’ delivery time stood at 52.6 points, slightly below the 52.7 points recorded in September.
Of the 16 industrial subsectors monitored, 12 recorded expansion, while four contracted.
Cement manufacturing emerged as the best-performing industrial subsector, with a PMI of 60.2 points, while chemical and pharmaceutical products recorded the weakest performance at 43.4 points.
Agriculture maintained its position as one of the strongest drivers of business expansion, supported by improved farming activities and new orders.
The general farming activities index rose to 56.8 points, while new orders increased to 55.6 points. Livestock also recorded strong performance, with a PMI of 56.4 points.
In the services sector, business activity stood at 54.2 points, while employment improved 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 at 60.2 points, while arts, entertainment and recreation posted the weakest reading at 47.1 points.
Despite the improvement in business activity, the report highlighted persistent cost pressures confronting companies, with both input and output prices increasing during the review period.
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 increases suggest that businesses continued to face higher costs of raw materials and other production inputs, with some transferring the additional costs to consumers through higher selling prices.
Agriculture recorded particularly strong increases in both measures, as its input price index climbed to 68.3 points from 65.8 points, while its output price index rose 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.
Commenting on the outlook, CSL Research said the gradual recovery in economic activities was expected to continue in the near term, supported by sustained agricultural production and improving industrial conditions.
It noted that the recovery in manufacturing output and new orders was particularly encouraging, as sustained improvements could support domestic production, capacity utilisation and employment.
However, the research firm cautioned that elevated input costs could undermine operating margins and limit the extent to which increased demand translates into higher output and profitability.
It also warned that the moderation in services activity suggested that the recovery remained uneven across sectors.
The CBN 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 PMI suggests that private sector activity is sustaining its recovery, although rising production costs remain a major risk to the durability of the expansion.
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