September 7, 2026/Cordros Report
According to data from the Central Bank of Nigeria (CBN), Nigeria’s composite Purchasing Managers’ Index (PMI) strengthened further to 52.7 points in August 2026 from 51.1 points in July, marking its strongest monthly expansion since September 2025. Most notably, the recovery has become broad based, with all three sectors expanding for the first time since March. Industry returned to expansion at 50.6 points (July: 49.6 points), while services accelerated to 53.3 points (July: 51.1 points) and agriculture strengthened to 53.4 points (July: 52.1 points). At the component level, output (53.9 | July: 51.8 points), new orders (51.8 | July: 50.8 points) and employment (52.4 | July: 51.1 points) all remained in expansion, suggesting that the recovery is being supported by improving demand rather than by firms simply working through existing order books. Meanwhile, the input-price index eased marginally to 62.5 points (July: 62.7 points), although output prices rose to 58.9 points (July: 57.9 points), suggesting that firms are passing a greater share of their cost pressures through to consumers. The August reading suggests that private sector activity is recovering from the weakness recorded in Q2-26. Overall, we expect the composite PMI to remain above the 50.0-point threshold in September, supported by improving domestic demand, sustained agricultural activity and the recovery in industry. However, renewed energy price pressures remain the key downside risk.
Nigeria’s composite PMI remained in the expansion region for a third consecutive month, following readings of 52.7 points in August, 51.1 points in July and 50.1 points in June. The sustained recovery from the April trough, together with the simultaneous expansion in output (53.9 | July: 51.8 points), new orders (51.8 | July: 50.8 points) and employment level (52.4 | July: 51.1 points), provides stronger evidence of broad based improvement in underlying business activity. The rise in new orders, in particular, suggests that the recovery is being supported by firmer demand rather than solely by firms working through existing order books.
The Recovery Has Become Broad Based
The latest PMI reading suggests that the recovery in Nigeria’s private sector activity is becoming more firmly established. In June, the private sector activity returned marginally to expansion, but the improvement was almost entirely driven by agriculture. In July, the recovery broadened as services returned to expansion and new orders crossed above the 50.0-point threshold. In August, industry has also returned to expansion, while activity in services and agriculture strengthened further.
Agriculture: Agricultural activity strengthened to 53.4 points in August from 52.1 points in July, extending the sector’s expansion to twenty-five consecutive months. Most notably, all five subsectors recorded expansion, making August the broadest based expansion since the recent recovery began. More specifically, the improvement was reflected in stronger general farming activity, which rose to 56.5 (July: 54.4 points), alongside continued expansion in new orders (53.2 | July: 52.8 points), employment (52.7 | July: 50.9 points) and raw-material inventories (51.2 | July: 50.5 points). At the subsector level, forestry recorded the strongest expansion at 59.2 (July: 53.6 points), followed by fishing (54.3 | July: 52.6 points), livestock (53.7 | July: 52.4 points), and agricultural support services (53.6 | July: 55.8 points), while crop production returned to expansion at 51.0 points (July: 49.4 points). The broad-based expansion provides a positive signal for agricultural activity as the planting and early harvest season progresses. Overall, we expect agricultural activity to remain in expansion through September, supported by seasonal factors and the approaching harvest period. The key risk remains weather-related disruptions, particularly excessive rainfall and flooding, which could weaken farm yields and temper growth in output.
Industry: The industry sector returned to expansion in August for the first time since March 2026, with the PMI rising to 50.6 (July: 49.6 points). However, the data present a mixed picture, with only five of the sixteen subsectors recording expansion. The recovery was led by oil refining, which rose sharply to 66.5 (July: 40.0 points), reversing the sharp contraction recorded in July. Basic metals, iron and steel (54.6 | July: 47.6 points) and food, beverage & tobacco (51.7 | July: 47.4 points) also returned to expansion, while electrical & electronics remained in expansion at 59.5 points (July: 61.6 points). However, weakness persisted across motor vehicles & assembly (34.6 | July: 42.5 points), non-metallic products (41.3 | July: 51.3 points) and cement (47.7 | July: 45.3 points). At the component level, output (51.4 | July: 49.2 points), employment (50.7 | July: 50.5 points) and suppliers’ delivery time (53.3 | July: 51.3 points) remained in expansion, although new orders (49.0 | July: 48.9 points) and raw-material inventories (49.4 | July: 48.2 points) remained in contraction. Overall, we expect industry to remain close to the 50.0 point threshold in September, although a sustained expansion would likely require new orders to return to expansion, particularly as elevated energy and financing costs continue to weigh on manufacturers.
Services: Services recorded the strongest PMI reading among the three sectors in August, rising to 53.3 points (July: 51.1 points) and marking its second consecutive month of expansion and strongest reading since February. The recovery was broad-based, with nine of the eleven subsectors expanding. Business activity (54.1 | July: 52.1 points), new orders (52.8 1 | July: 50.9 points), employment (53.3 1 | July: 51.4 points) and inventories (53.1 1 | July: 49.9 points) all remained in expansion, signalling continued momentum in the sector. The improvement in new orders and employment suggests that services are increasingly benefiting from firmer domestic demand. At the subsector level, administrative & support services (58.9 | 53.8 points), educational services (57.1 | July: 52.9 points), human health & social services (55.9 | July: 53.7 points) and finance & insurance (55.8 | July: 51.6 points) led the expansion, while accommodation & food services returned to expansion at 51.4 points after three consecutive months of contraction. Meanwhile, professional, scientific & technical services (47.6 | July: 48.3 points) and transportation, courier & storage (49.2 | July: 47.5 points) remained in contraction. Overall, with output, new orders, employment and inventories all in expansion, the services sector provides the clearest evidence that the broader recovery is becoming increasingly supported by firmer demand.
Key Observations from the July Report
The Recovery is Now Broad Based: The August report provides the strongest evidence yet that Nigeria’s private-sector recovery is becoming more firmly established. All three major sectors recorded expansion during the month, compared with only agriculture in June and agriculture and services in July. The recovery has therefore evolved from a narrow, agricultural led upturn into a broader-based expansion.
Demand Continues to Improve: New orders increased to 51.8 points from 50.8 points in July and 49.0 points in June. This marks the second consecutive month of expansion and is particularly significant because new orders provide an important indication of incoming demand. Unlike in June, when output and employment were expanding while new orders remained below the 50.0 point threshold, the August data show that stronger incoming demands is now accompanying higher production and employment.
Price pressures are beginning to soften: Industry’s return to expansion marks an important step in the broadening of the recovery, led by a sharp rebound in oil refining and an improvement in supply-chain conditions. The return of output and employment to expansion also suggests that industrial activity is beginning to recover after four consecutive months of contraction. However, industrial new orders remained below the 50.0-point threshold, suggesting that demand has yet to fully catch up with the improvement in production. A sustained recovery would be more firmly established if new orders also returned to expansion.
The Macroeconomic Signal: Stronger Q3-26 Growth Remains on Track
We assess the August 2026 PMI alongside key macroeconomic indicators — real GDP growth, inflation, the exchange rate, and the monetary policy rate — to gauge the current state of the Nigerian economy.
Growth momentum is strong: The August PMI is consistent with a stronger start to Q3-26. The simultaneous expansion in output, new orders and employment across all three major sectors points to a broad based improvement in activity. This is particularly encouraging following the stronger-than-expected Q2-26 GDP growth of 4.43% y/y. The PMI data suggest that the recovery in economic activity has carried into Q3-26, building on the momentum established in the previous quarter. This is consistent with our expectation of stronger economic growth in Q3-26 and our 2026E forecast of 4.28% y/y.
Cost Pressures Continue to Moderate: The composite input-price index continued to ease, declining to 62.5 points, signalling a further moderation in cost pressures and supporting a more favourable inflation outlook. While the output-price index increased to 58.9 points, suggesting some pass-through of costs to consumers, the broader trend in input prices remains encouraging. That said, the recent uptick in global energy prices amid renewed geopolitical tensions in the Middle East remains the key downside risk. While higher crude oil prices support Nigeria’s external and fiscal position, a sustained increase could raise domestic energy, transport and logistics costs and slow the pace of disinflation.
External Sector Resilience Continues to Reinforce the Recovery: The naira has remained supportive of private-sector activity, appreciating by approximately 9.0% YTD to around NGN1,321.00/USD as of 4 September. The stronger currency should help contain imported input costs and limit exchange-rate pass-through to domestic prices, while improving external buffers provide additional support for investor confidence. At the same time, Moody recently revised Nigeria’s sovereign outlook to positive, which could improve investor sentiment and provide further support for capital inflows and the naira.
Monetary Policy May Ease Further: The recent disinflation trend (July: 15.43% y/y vs June: 15.91% y/y), stronger PMI reading, easing input costs and a firmer naira provide a more favourable backdrop for further monetary easing. However, rising output prices and renewed global energy-price pressures could keep the CBN cautious if they slow the pace of disinflation.