Nigeria’s private-sector activity continued to strengthen in September, with the country’s Composite Purchasing Managers’ Index (PMI) rising to 53.0 points from 52.7 in August.
The latest reading marks the fourth consecutive month of expansion in overall economic activity. A PMI reading above 50 indicates expansion, while a figure below 50 signals contraction.
The improvement suggests that businesses are experiencing better operating conditions, with stronger output, new orders and inventories supporting the recovery.
However, the positive business data has not been matched by stronger household confidence. Recent Central Bank of Nigeria (CBN) surveys indicate that households have become more pessimistic about economic conditions, personal finances and prices. (Premium Times Nigeria)
Business activity continues to expand
The September PMI showed that growth was spread across Nigeria’s major economic sectors.
Industry recorded a notable improvement, with its PMI increasing to 52.0 points from 50.6 in August. This represents the sector’s second consecutive month of expansion.
The Services PMI remained almost unchanged at 53.2 points, compared with 53.3 points in August, extending its expansion to a third consecutive month.
Agriculture also remained in expansion territory. Its PMI stood at 53.1 points in September, slightly below the 53.4 recorded in August, but marking the sector’s 26th consecutive month of growth. (Nairametrics)
Across the 32 subsectors covered by the survey, 23 recorded expansion while nine contracted.
New orders recorded the strongest month-on-month improvement among the major components, rising to 53.7 points. Output stood at 53.9 points, while employment increased to 51.5 points.
Higher costs remain a concern
Despite the improvement in economic activity, businesses are still facing pressure from rising input costs.
The composite input price index increased by 0.8 points in September, while the output price index declined by 0.5 points. This suggests that businesses are dealing with higher production costs while having limited room to increase selling prices. (Proshare)
The situation could put pressure on profit margins if the gap between input and output prices continues to widen.
Agriculture recorded the strongest input-cost pressure among the three major sectors, with its input price index reaching 65.8 points compared with an output price index of 58.5 points.
Industry also recorded improvement during the month, although some subsectors remained under pressure. Ten of the 16 industrial subsectors surveyed recorded expansion, while six contracted.
Chemical and pharmaceutical products recorded the steepest decline, continuing a prolonged period of contraction.
Household confidence remains weak
While businesses are reporting stronger activity, Nigerian households appear less convinced that the economic recovery is improving their everyday financial situation.
The CBN’s household survey showed weaker sentiment around economic conditions, household finances and prices during September. (Premium Times Nigeria)
This creates a contrast between improving economic activity and the experience of many consumers.
Businesses may be receiving more orders and producing more goods, but households continue to face concerns about prices and their purchasing power.
The difference is important because stronger economic growth ultimately needs to translate into improved household incomes, employment and living standards.
Recovery still faces challenges
The latest PMI figures provide evidence that Nigeria’s economy is gradually gaining momentum, but the recovery remains uneven.
Industry has returned to expansion after earlier weakness, while services have maintained their positive performance. Agriculture has also remained resilient for more than two years.
However, rising input costs, weak household confidence and pressure on business margins could limit how quickly the improvement feeds through to consumers.
The September PMI therefore presents a mixed picture: businesses are becoming more optimistic about activity, but households are still waiting to feel the benefits of the recovery in their daily lives.
For the expansion to become more sustainable, stronger business activity will need to be accompanied by lower cost pressures, improved purchasing power and greater confidence among consumers.
