The Central Bank of Nigeria’s (CBN) latest Purchasing Managers’ Index (PMI) report for July 2024 reveals that the Composite Employment Index has continued its downward trajectory for the seventh consecutive month, highlighting ongoing challenges in the labor market.
The report showed the index at 48.7 points, signaling a contraction in employment, though it reflects a slight improvement from the 48.3 points recorded in June 2024.
“At 48.7 index points, the Composite Employment Level indicated contraction in July 2024 for the seventh consecutive month,” the report stated. “The index improved in July 2024 when compared to the 48.3 points recorded in the previous month.”
The report also highlighted that 18 subsectors reported declines in employment levels, with the Printing & Related Support Activities subsector experiencing the most significant reduction. On the other hand, the Primary Metal subsector remained stable, with no changes in employment levels, while 17 subsectors, led by the Petroleum & Coal Products subsector, reported increased employment levels.
The continued contraction in employment levels underscores the difficulties businesses face in sustaining or expanding their workforce in a challenging economic environment. Although the slight improvement in the index suggests a slow recovery, the overall trend emphasizes the need for targeted economic policies to stimulate job creation and support industries facing the most severe employment challenges.
The PMI, which assesses the economic health of the manufacturing, services, and agricultural sectors, showed slight improvement in the employment index. However, the figure still indicates contraction in employment across these sectors. The industrial sector was particularly affected, with the employment index falling to 47.0 points, indicating ongoing workforce reductions across several subsectors, including Printing & Related Support Activities and Primary Metal.
In the services sector, employment remained flat at 50.0 points, with mixed results across subsectors. The agricultural sector also experienced a continued decline in employment, with the index at 47.8 points, driven by significant drops in the Fishing/Fish Farming and Livestock subsectors.
These developments come against the backdrop of Nigeria’s broader employment challenges, with the National Bureau of Statistics (NBS) reporting that the country’s unemployment rate rose to 5.0% in the third quarter of 2023, up from 4.2% in the previous quarter. Urban areas were hit harder, with an unemployment rate of 6.0%, compared to 4.0% in rural areas. The labor force participation rate also declined slightly, from 80.4% in Q2 2023 to 79.5% in Q3 2023, with men participating at a higher rate (80.9%) than women (78.2%).
Nairametrics earlier reported that the CBN’s PMI for July indicated a continued contraction in economic activities, marking the 13th consecutive month of decline since June 2023. The PMI for July stood at 49.7 points, indicating a contraction in economic activities during the month, although this was an improvement from June’s 48.8 points.
The PMI is calculated based on responses about changes in various aspects of business activities. An index above 50.0 points signals expansion, while an index below 50.0 points indicates contraction. An index of exactly 50.0 points reflects no change in business activity.
The report noted that the slight increase in PMI for July was driven by expansion in output level, suppliers’ delivery time, and inventory stock, while new orders and employment contracted during the period.
Credit: Nairametrics (Text Excluding Headline)
