The Central Bank of Nigeria (CBN) on Friday reported that economic activities declined faster in June, confirming that the nation’s economy formally entered into recession in the second quarter of the year. 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. Nigeria’s economy contracted in the first quarter of the year, 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.
CBN’s Purchasing Manager Index (PMI) decline in June represents decline for six consecutive months. The report revealed that in the manufacturing sector, “Production level, new orders, and employment level and raw material inventories declned at a faster rate; while supplier delivery time improved at a faster rate”. 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, “The Manufacturing PMI dropped to 41.9 index points in June 2016, compared to 45.8 in the preceding month. This implies 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.”
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