Nigeria’s economic activity expands for fourth month as PMI hit

Nigeria’s economic activity expanded for the fourth consecutive month in September, with the Central Bank of Nigeria’s (CBN) Composite Purchasing Managers’ Index (PMI) rising to 53.0 points from 52.7 in August, as stronger orders, output and employment signalled improving business conditions across the economy.

The latest reading remained above the 50-point threshold that separates expansion from contraction, pointing to continued growth across Industry, Services and Agriculture.

The expansion was driven principally by stronger new orders. The New Orders Index rose to 53.7 points, while the Output Index stood at 53.9 points and Employment increased to 51.5 points, suggesting that firms were responding to improved demand with higher production and modest hiring.

The improvement in business activity was also supported by better supply conditions. The Stock of Raw Materials Index rose to 52.1 points, while the Suppliers’ Delivery Time Index stood at 52.7 points, indicating faster supplier response and some easing in supply-chain constraints.

Twenty-three subsectors recorded expansion during the month, with Educational Services posting the strongest growth. Nine subsectors contracted, led by Chemical and Pharmaceutical Products.

The industrial sector provided a particularly important boost. Industry PMI increased to 52.0 points from 50.6 in August, extending its expansion to a second month after months of contraction earlier in the year.

Industrial output rose to 53.2 points, while new orders and employment stood at 51.7 and 51.1 points, respectively. Raw materials inventories also returned to expansion, rising to 51.1 points from 49.4 in August.

Ten of the 16 industrial subsectors expanded, with Water Supply, Sewerage and Waste Management recording the strongest growth. Six subsectors remained in contraction, with Chemical and Pharmaceutical Products recording the steepest decline.

Services maintained their expansion, with PMI at 53.2 points in September compared with 53.3 in August. Nine of the 11 services subsectors recorded growth, with Educational Services leading the sector, while Professional, Scientific and Technical Services contracted most sharply.

Agriculture remained the most consistent pillar of the recovery, expanding for the 26th consecutive month. Its PMI eased slightly to 53.1 points from 53.4 in August, with four of five subsectors recording growth and Livestock posting the strongest expansion.

General Farming Activities recorded 54.6 points, while New Orders stood at 54.4 points, indicating continued demand for agricultural output.

However, the latest PMI also exposes the pressure businesses continue to face. The Composite Input Price Index increased by 0.8 points in September, while the Output Price Index fell by 0.5 points.

The divergence suggests that businesses are facing higher input costs without a corresponding ability to increase selling prices, potentially squeezing margins and limiting the pace at which higher activity translates into stronger profits and investment.

That pressure remains important for Nigeria’s recovery. Stronger orders and output can support employment and business expansion, but rising production costs can undermine those gains if companies are forced to absorb higher expenses.

The September PMI therefore presents a cautiously improving picture of the economy: activity is expanding across the three major sectors, supply conditions are improving, and demand is strengthening, but elevated input costs remain a major constraint on how quickly that recovery can deepen.

For Nigeria, the next test is whether sustained expansion in business activity can translate into stronger industrial output, investment and employment while cost pressures continue to moderate.