There are indications that Nigeria’s economy has suffered a contraction in the second quarter of the year, and hence a slide into recession, a CBN report reveals.
On Friday, CBN’s Purchasing Manager Index (PMI) for June revealed that economic activities declined faster in June. The decline in June represented decline for six consecutive months.
In the first quarter of the year, Nigeria’s economy contracted as it recorded negative Gross Domestic Product (GDP) during the quarter.
According to the National Bureau of Statistics, the nation’s GDP in Q1 2016 contracted by 0.36 per cent, the first negative growth in many years.
Economic recession is a period of general decline in economic activities and it is typically defined as a decline in GDP for two or more consecutive quarters.
In the manufacturing sector, Production level, new orders, employment level and raw material inventories declined at a faster rate; while supplier delivery time improved at a faster rate, the report reveals.
It also stated that in the non manufacturing sector, “Business activity, new orders and employment level declined at faster rate while raw materials inventories declined at a slower rate”
The CBN stated that the Manufacturing PMI dropped to 41.9 index points in June 2016, compared to 45.8 in the preceding month, implying that the manufacturing sector declined at a faster rate during the review period.
Of the sixteen manufacturing sub-sectors, fourteen recorded decline in the review month in the following order: electrical equipment; non metallic mineral products; furniture & related products; fabricated metal products; chemical & pharmaceutical products; printing & related support activities; paper products; food, beverage & tobacco products; cement; computer & electronic products; plastics & rubber products; textile, apparel, leather & footwear; petroleum & coal products and primary metal.
The remaining two sub-sectors however recorded expansion in the following order: appliances & components and transportation equipment.
The composite PMI for the non-manufacturing sector recorded decline for the sixth consecutive month. The index dropped to 42.3 points, indicating a faster decline compared to that in May 2016.
Of the eighteen non-manufacturing sub-sectors, fourteen recorded decline in June 2016. Of the eighteen non-manufacturing sub-sectors, fourteen recorded decline in June 2016 in the following order: construction; professional, scientific, & technical services; management of companies; utilities; accommodation & food services; real estate, rental & leasing; electricity, gas, steam and air conditioning supply; educational services; wholesale trade; public administration; information & communication; finance & insurance; repair, maintenance/washing of motor vehicles; and arts, entertainment & recreation.
The health care & social assistance sub-sector remained unchanged, while the remaining three subsectors recorded growth in the order: water supply, sewage & waste management; agriculture; and transportation & warehousing.