By Babajide Komolafe
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. Indications that the economy suffered contraction in the second quarter, and hence a slide into recession, emerged on Friday, as the CBN’s Purchasing Manager Index (PMI) for June revealed that economic activities decline faster in June. The decline in June represented 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.
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