As Nigeria’s Business Activity Expands in April ’19; Unemployment Rate Rises to 64.6% in Jigawa…
Recently released Purchasing Managers’ Index (PMI) survey report for April 2019 showed faster expansions in both the manufacturing and non-manufacturing businesses amid increased new demand and improved business activities. According to the survey, the manufacturing composite PMI increased to 57.7 index points in April 2019 (faster than 57.4 in the preceding month), the twenty fifth consecutive expansion.
The marginal rise in manufacturing composite PMI which was driven by faster expansion in new orders to 57.2 in April 2019 (compared to 56.7 in March 2019), engendered the increase in manufactured goods as production level rose to 58.8 in April 2019 (from 58.3 in March 2019).
Amid higher production level, the purchase of raw materials/inventories also increased – work in progress/inventory index rose to 57.5 (from 57.1 in the preceding month) – despite faster rise in raw material prices – input prices rose to 60.2 (from 57.6). In the same vein, increased hires were recorded by manufacturers as more workers were engaged for production purpose – the index for employment rose to 57.0 points in April 2019 (compared to 56.9).
Producers crashed the selling prices of their products – output prices expanded slower, to 52.4 (from 62.3) – in order to stimulate new customer demand. Also, stock of finished goods expanded slower, to 54.4 (from 60.7) indicative of the stimulated customer demand. Of the fourteen manufacturing sub-sectors surveyed, five sub-sectors (or 35.71%) recorded faster expansions (lower than six in the preceding month).
Notably, manufacturers of ‘Electrical equipment’, ‘Plastics & rubber products’ and ‘Transportation equipment’ registered the sharpest expansion in activities of 69.2 (from 53.3), 66.3 (from 55.5) and 61.7 (from 53.1) respectively.
Also, the non-manufacturing sector continued its growth trajectory at a faster pace as the non-manufacturing composite PMI rose to 58.7 index points in April 2019 (from 58.5 index points in March 2019), the twenty fourth consecutive expansion. This was partly driven by faster expansions in incoming business and business activity to 59.0 (from 58.9) and 58.4 (from 57.8) respectively which necessitated the rise in employment level to 58.7 (from 57.8).
However, amid rising prices of raw materials – average price of inputs increased to 52.1 (from 50.5) – inventory expanded slower to 58.5 (from 59.5). Meanwhile, the revised Q3 2018 labour force statistics released by National Bureau of Statistics (NBS) showed that Nigeria’s labour force stood at 90.47 million in Q3 2018 (6.32% up from 85.09 million in Q3 2017).
Further breakdown of the data showed that despite the increase in labour force to 90.47 million, unemployement rate rose to 23.1% in Q3 2018 from 18.8% in Q3 2017 as the classification of those working less than 20 hours a week and those who did nothing together increased the number of unemployed persons to 20.93 million (from 15.99 million in Q3 2017).
Also, 18.21 million persons were underemployed, as they worked less than 40 hours, in Q3 2018 (0.99% up from 18.03 million in Q3 2017). This brought the total unemployed plus underemployed persons to 39.14 million in Q3 2018 from 34.03 million in Q3 2017. Amongst the 37 states (inclusive of the Federal Capital Territory), five states with the highest unemployment rates – when underemployed and unemployed numbers were combined in the quarter – include; Jigawa State recorded 64.6%, Yobe (58.9%), Rivers (58.1%), Kano (57.8%) and Kaduna (57.8%).
However, the fully employed, 56.73% of the labour force, rose to 51.33 million in Q3 2018 (from 51.06 million in Q3 2017). We expect faster rise in demand and production level, given the Presidential assent to the new minimum wage bill and the recently passed 2019 Appropriation Bill by the National Assembly, which are expected to boost spending going forward. High unemployment is likely to persist amid slow economic growth, especially in the northern part of country due to the incessant insecurity challenges.