October 5, 2026/Cordros Report
Nigeria’s composite Purchasing Managers’ Index (PMI) rose to 53.0 points in September 2026 from 52.7 points in August, marking the fourth consecutive month of expansion and its strongest reading since April (49.4 points). Although the improvement in the headline index was modest, the underlying composition points to a more significant development – the recovery in industrial activity is increasingly being supported by stronger demand. Industrial activity rose to 52.0 points (August: 50.6 points), with its new orders index returning to expansion for the first time since March. Meanwhile, services and agriculture remained in expansion at 53.2 and 53.1 points, respectively, although both eased from 53.3 and 53.4 points in August. At the composite level, new orders strengthened to 53.7 points (August: 51.8 points), while output was unchanged at 53.9 points. Employment remained in expansion but eased to 51.5 points (August: 52.4 points). However, the input-price index rose to 63.3 points (August: 62.5 points), while the output prices eased to 58.4 points (August: 58.9 points), indicating renewed pressure on business input costs despite a modest moderation in output price growth. Overall, the September reading is consistent with our expectation of resilient economic growth in Q3-26. Looking ahead, we expect the composite PMI to remain above the 50.0-point threshold in October, supported by firmer order books and seasonal agricultural activity, although rising operating costs could constrain the pace of expansion.
Nigeria’s composite PMI rose by 0.3 points to 53.0 points in September, extending the expansion trend that began in June. All three major sectors remained in expansion for the second consecutive month, while 23 of the 32 subsectors surveyed recorded growth. Industry strengthened further, while services and agriculture recorded modest slowdowns. The key improvement was in incoming demand. Composite new orders index rose by 1.9 points to 53.7, its strongest reading since February, with orders expanding across all three sectors for the first time since March. This suggests that production growth could strengthen as firms respond to firmer order books. However, output was unchanged and employment growth softened, indicating that businesses have yet to translate stronger order books into a faster expansion in production and hiring.
Industrial Demand Provides Firmer Support for the Recovery
The September PMI marks another step in the recovery from the weakness recorded in Q2-26. Agriculture was the first sector to return to expansion in June, followed by services in July and industry in August. In September, the improvement moved beyond the sector headlines: industrial new orders and raw-material inventories returned to expansion, providing stronger evidence of improving demand and purchasing activity alongside the recovery in production.
Agriculture: Agricultural activity remained in expansion for the twenty-sixth consecutive month, although the PMI eased to 53.1 points (August: 53.4 points). The more meaningful development was the divergence between stronger new orders (54.4 | August: 53.2 points) and softer general farming activity (54.6 | August: 56.5 points). This suggests that demand is strengthening, but activity has yet to respond fully. Rising raw-material inventories (52.1 | August: 51.2 points) indicate continued input accumulation and could provide support for subsequent production. Among the subsectors, livestock strengthened to 55.1 points (August: 53.7 points), while crop production improved more modestly to 51.5 points (August: 51.0 points). However, forestry (53.1 | August: 59.2 points) and fish farming (53.2 | August: 54.3 points) moderated, while agricultural support services slipped into contraction at 47.6 points (August: 53.6 points).
Notably, the distinction between expanding activity and improving yields matters. Although the overall farm-yield index returned to expansion at 50.7 points (August: 49.7 points), crop-production yields remained below the 50-point threshold at 49.4 points. Consequently, the improvement in crop activity does not yet provide evidence of a broad-based increase in yields sufficient to materially ease food price pressures. Agricultural input-price pressures also increased to 65.8 points (August: 64.8 points), indicating continued cost pressures for producers. Overall, the harvest season should support agricultural activity and the availability of food products in October. However, the September readings suggest that food-price relief will depend on the strength of actual supply gains and their delivery to markets. Weather disruptions, insecurity and distribution costs remain risks to the transmission of higher agricultural output into market supply and lower food-price pressures.
Industry: Industry provided September’s clearest improvement, rising to 52.0 points (August: 50.6 points). Ten of the sixteen subsectors expanded, up from five in August, even as oil refining moderated to 52.5 points (August: 66.5 points). This suggests that the industrial recovery is becoming less reliant on the strength of oil-refining activity. Construction, cement, wood products, paper products and utilities also returned to expansion, pointing to a broader improvement across industrial and related activities. More importantly, new orders returned to expansion at 51.7 points (August: 49.0 points). Raw-material inventories also returned to expansion at 51.1 (August: 49.4 points), while output strengthened to 53.2 (August: 51.4 points). The combination of stronger order books and rising raw-material inventories points to increased input replenishment, providing firmer support for continued production. However, input-price pressures rose to 63.5 points (August: 61.7 points), while output-price pressures eased to 56.7 points (August: 58.7 points). This suggests that stronger activity may not translate fully into improved margins, which could constrain firms’ capacity or willingness to increase investment.
Services: Services held broadly steady at 53.2 points (August: 53.3 points), sustaining expansion for the third consecutive month. New orders strengthened to 54.5 points (August: 52.8 points), but business activity changed little at 54.0 points, while employment eased to 51.7 points (August: 53.3 points). The divergence between new orders and employment suggests that firms are absorbing stronger demand largely through existing capacity than through additional hiring. Educational services strengthened to 58.9 points (August: 57.1 points), consistent with seasonal demand around school resumption, while trade rose to 56.2 points (August: 50.9 points), providing a stronger signal of domestic commercial activity. However, the moderation in administrative and support services (53.6 | August: 58.9 points), real estate (51.4 | August: 55.2 points) and finance & insurance (54.5 | August: 55.8 points) indicates that the improvement was not uniform. Meanwhile, transportation, courier & storage remained in contraction at 49.0 points (August: 49.2 points). This divergence suggests that improving commercial demand has yet to translate into a broader recovery in transport and distribution activity. It also highlights a potential constraint: persistent weakness in logistics could limit the efficiency with which stronger agricultural and industrial output reaches consumers. Overall, stronger orders should support continued expansion in the services sector in October. However, the softer hiring response suggests that the improvement in business activity may take longer to translate into stronger household incomes and, ultimately, consumption.
Key Observations from the September Report
Demand support is strengthening: The key weakness in August was industrial new orders remaining in contraction despite recovering production. September readings addressed that weakness, with new orders returning to expansion across agriculture, industry and services. This provides a firmer basis for continued economic expansion.
Stronger Demand Has Yet to Translate into Faster Hiring: Stronger orders alongside slower employment expansion suggest that the pickup in activity has yet to generate a corresponding improvement in labour demand. This matters for the durability of the recovery, as stronger employment and household income would help transmit the initial business recovery into stronger consumption. Until hiring strengthens, consumption is likely to remain more dependent on existing incomes and improvements in real purchasing power from continued disinflation.
Higher activity may not translate into stronger margins: The renewed increase in input-price pressures, alongside softer selling-price pressures, introduces a potential margin constraint. Businesses are facing stronger demand, but potentially less scope to rising input costs through to selling prices. While the PMI does not measure profitability directly, the divergence suggests that revenue and earnings growth could move differently, particularly for industrial firms with significant exposure to energy and raw-material costs.
Domestic demand remains the main source of support: Composite export orders remained in contraction at 48.2 points (August: 47.6 points), despite stronger overall orders. The recovery therefore appears to be receiving stronger support from domestic demand than from new overseas order. This makes household purchasing power, domestic financing conditions and operating costs particularly important to the durability of the recovery.
The Macroeconomic Signal: Broader Expansion Supports Q3-26 Growth
We assess the September 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 has improved: The composite PMI averaged 52.3 points in Q3-26, compared with 49.7 points in Q2-26. More importantly, September ended the quarter with expanding orders across all three sectors. Following real GDP growth of 4.43% y/y in Q2-26, the Q3-26 PMI readings are consistent with continued economic resilience. In our view, the broader industrial recovery should improve the composition of economic growth by providing a stronger contribution from industry alongside agriculture and services. We retain our existing 2026E growth forecast of 4.28% y/y.
Higher Costs Could Slow Disinflation: Headline inflation eased to 15.39% y/y in August (July: 15.43% y/y). September’s PMI nevertheless points to renewed pressure on business input cost. Seasonal improvements in food availability should provide some relief, but higher production and distribution costs could limit the benefits to consumer. Softer output-price indices indicate less widespread selling-price increases, rather than falling prices. If firms initially absorb higher costs, consumer inflation may remain contained while margins weaken. Persistent cost increases would, however, raise the risk of subsequent pass-through into consumer prices.
External Stability Supports Business Activity: According to the CBN, gross FX reserves stood at USD54.93 billion on 30 September, equivalent to c.11.3 months of import cover. This buffer strengthens external liquidity and should reduce exchange-rate uncertainty for import-dependent businesses. However, rising PMI input-price pressures show that external stability alone cannot deliver broad operating-cost relief. Domestic energy, logistics and financing conditions remain central to business performance.
Further Monetary Easing Remains Conditional: The CBN reduced the MPR to 23.0% in September, describing the move as an operational realignment rather than a change in the underlying policy stance. Looking ahead, stronger orders reduce the immediate need to additional monetary support to business activity, while renewed input-cost pressures strengthen the case for caution. Further easing will depend on continued progress in disinflation and evidence that improved policy transmission into credit conditions.