Nigerian businesses are reducing workforce, CBN data reveals
The Central Bank of Nigeria’s (CBN) latest Purchasing Managers’ Index (PMI) report for July 2024 reveals that the Composite Employment Index continued its downward trend for the seventh consecutive month, reflecting ongoing challenges in the labour market.
According to the report, the index recorded 48.7 points, indicating a contraction, though it marked a slight improvement from the 48.3 points recorded in June 2024.
The report read: “At 48.7 index points, the composite Employment Level indicated contraction in July 2024 for the seventh consecutive month. The index improved in July 2024 when compared to the 48.3 points recorded in the previous month.”
Employment levels in 18 subsectors declined
According to the report, 18 subsectors reported contractions in employment, with the Printing & Related Support Activities subsector experiencing the most significant decline.
Meanwhile, the Primary Metal subsector remained stable, showing no change in employment levels. Conversely, 17 subsectors reported increases in employment, with the Petroleum & Coal Products subsector leading the way with the highest employment levels.
The report noted: “Eighteen subsectors reported a contraction in Employment, with Printing & Related Support Activities recording the highest decline in the review month. Primary Metal subsector remained unchanged, while the remaining 17 subsectors reported increased Employment Levels with Petroleum & Coal Products subsector having the higher Employment Level.”
The continued contraction in employment levels highlights the persistent difficulties faced by businesses in maintaining or expanding their workforce in a challenging economic environment.
The marginal improvement in the index suggests a slow recovery, but the overall trend stresses the need for targeted economic policies to stimulate job creation and support industries facing the most significant employment challenges.
Employment levels drop in key sectors
The PMI, which measures the economic health of the manufacturing, services, and agricultural sectors, showed a slight improvement in the employment index. However, the figure still indicates a contraction in employment across the sectors.
The report highlights that while the overall economic activity showed marginal improvement, the employment levels have not kept pace. This decline was most pronounced in the industrial sector, where the employment index dropped to 47.0 points, reflecting a persistent reduction in workforce levels across several subsectors, including Printing & Related Support Activities and Primary Metal.
In the services sector, employment remained stagnant at 50.0 points, with some subsectors experiencing growth while others reported contractions.
The agricultural sector also saw a continued decline in employment levels, with the index standing at 47.8 points, driven by significant drops in the Fishing/Fish Farming and Livestock subsectors.
What you should know
Based on the last unemployment report by the National Bureau of Statistics (NBS), the unemployment rate in Nigeria rose to 5.0% in the third quarter of 2023 from 4.2% in the previous quarter, which further illustrates Nigeria’s broader employment challenges. Urban areas have a higher unemployment rate (6.0%) than rural areas (4.0%). During Q3 2023, Nigeria’s labour force participation rate stood at 79.5%, down from 80.4% in Q2 2023. Men exhibited a participation rate of 80.9%, while women had a rate of 78.2%.
Nairametrics earlier reported that the CBN’s PMI report for July indicates a continued contraction in economic activities, marking the 13th consecutive month of decline since June 2023. According to the report, the PMI for the month stood at 49.7 points- signalling a contraction in economic activities during the month but an improvement from June which stood at 48.8 points.
The PMI is calculated based on responses about the direction of change in various aspects of respondents’ business activities. An index above 50.0 points signals an expansion in business activities, while an index below 50.0 points indicates a contraction. An index of exactly 50.0 points reflects no change in business activity.
The report noted that the increase in PMI for the month was on the back of expansion in output level, suppliers’ delivery time and stock of inventory expanded while new orders and employment contracted during the period.
