WED JULY 15 2026-theGBJournal| Nigeria’s composite Purchasing Managers Index (PMI) returned to expansion in June 2026, rising to 50.1 points from 49.6 in May and ending two months of contraction.
Breaking down the data, the recovery was led by the agriculture sector, expanding to 52.1 points (May: 50.1 points), while the industry (49.5 | May: 49.3 points) and services (49.4 | May: 49.3 points) sectors remained in contraction.
At the component level, output (50.5 | May: 50.4 points) and employment (51.0 | May: 51.6 points) remained in expansion and input-price index eased to 64.3 points (May: 66.8 points).
In our view, we see any recovery as technical rather than broad-based until new orders (49.0 vs May: 48.0 points) return to expansion. Given the co-movement of the PMI and economic growth, we maintain that Q2-26 GDP will print at 4.20% y/y and expect the composite PMI to hold above 50.0 points in July.
Based on the recently released data from the Central Bank of Nigeria (CBN), Nigeria’s June 2026 composite PMI printed at 50.1 points in June, after falling below the 50.0-point threshold in April (49.4 points) for the first time in sixteen months and holding in the contraction through May (49.6 points).
For context, private sector activity has weakened steadily since the start of the year. After peaking at 57.6 points in December 2025, the composite PMI declined for four consecutive months to a trough in April. Against this backdrop, June’s PMI uptick suggests the economy is beginning to recover – but the rebound is fragile, driven almost entirely by agriculture.
Cross-Cutting Themes: Agriculture Drives the PMI Recovery
The composite PMI’s marginal return to expansion conceals sharp divergence beneath the surface, with the three broad sectors – Agriculture, Industry and Services – moving in strikingly different directions. A closer look at each sector (and the subsectors within them) reveals where the economy’s momentum is building and where it continues to erode.
Agriculture: The sector was the sole engine of June’s PMI expansion, printing 52.1 points, up from 50.9 points in May, and extending its growth run to twenty-three consecutive months.
This primarily reflected the broad-based expansion across all five subsectors, as the wet season planting cycle improved general farming activities (53.9 | May: 52.8 points), employment (53.7 | May: 51.6 points), and new orders (50.7 | May: 49.8 points). Precisely, the gains were led by the forestry subsector (78.1 | May: 50.0 points), with crop production (51.3 | May: 50.4 points), fish farming (50.9 | May: 49.9 points) adding some layer of support.
While the livestock (52.3 | May: 52.5 points) and agricultural support services (50.3 | May: 50.6 points) subsectors moderated slightly, they remained above the 50.0-point threshold. The only reading below the threshold was the stock of raw materials (49.9 | May: 49.6 points), which we believe is a sign of drawdowns during an active planting and harvesting cycle, not weakening demand.
Industry: Activity in the sector contracted for the third straight month, coming in at 49.5 points (May: 49.3 points). Weakness was widespread as 11 of the 17 subsectors contracted. The steepest declines came from the metal (35.4 | May: 41.7 points), chemical & pharmaceutical products (41.0 | May: 41.3 points), furniture (43.3 | May: 49.0 points) and paper products (43.1 | May: 46.3 points) sub-sectors.
Meanwhile, manufacturing printed steady at 48.9 (May: 48.9 points), reflecting recovery in petroleum and coal products (55.6 | May: 48.7 points) and printing & related support activities (55.6 | May: 50.7 points).
We attribute the recent contractions to the Middle East conflict, which drove energy prices higher, with second-order effects on logistics and operational costs.
The bright spots were few but real – petroleum & coal products (55.6 | May: 48.7 points), the mining and quarrying/utilities grouping (56.5 | May: 60.2 points) and food, beverage & tobacco (52.8 | May: 51.8 points) expanded. At the component level, employment (51.1 | May: 51.3 points) and suppliers’ delivery time (50.9 | May: 49.4 points) stayed positive — evidence of resilient labour utilisation and improving supply chains even as demand softened.
Services: Similarly, services contracted for the third consecutive month, at 49.4 (May: 49.3 points). Of the 14 subsectors, 6 contracted and 8 expanded – a more balanced split than the headline implies, but still net-negative on a weighted basis.
Most notably, transportation & warehousing activity moderated to 37.9 (May: 38.1 points), followed by professional, scientific & technical services (44.0 | May: 45.8 points), accommodation & food services (45.0 | May: 46.0 points) and wholesale trade (47.1 | May: 51.3 points).
Against these, motion pictures, cinema, sound recording & music production led the gainers at 56.3 (May: 50.0 points), with management of companies (54.8 | May: 53.6 points), educational services (53.5 | May: 53.7 points), finance & insurance unchanged at 53.0 and utilities (52.0 | May: 49.4 points) also growing.
Notably, non-market services (52.3 | May: 52.0 points) outperformed market services (48.6 | May: 48.7 points), placing the contraction in demand-sensitive, discretionary and logistics-linked activities rather than across the board.
Key Issues from the June Report
A recovery built almost entirely on Agriculture: Of the three broad sectors, only agriculture expanded. Strip out agriculture, and the composite index would sit clearly in contraction. In our view, the sector is not merely leading the recovery – agriculture is the recovery that happened in June 2026.
New Orders are the weak link: The composite new orders index sat at 49.0 in June – an improvement on May’s 48.0, but a third consecutive month in contraction. Because new orders are the clearest read on forward demand, the persistence below 50.0 print is the main reason we resist calling the June expansion a genuine turnaround. Output (50.5) and employment (51.0) are recovering ahead of new orders, a familiar pattern in a slowdown – firms are producing and retaining staff, but the order book has not yet confirmed the rebound.
Price pressures are easing: The composite input price index fell by 2.5 points to 64.3 points, and the output price index eased by 0.8 points to 60.9 points. Both remain elevated and well above the 50.0-point mark, but the direction is unambiguously towards moderation.
Across all three sectors, the month-on-month input price changes still outpaced output price changes, meaning margins remain squeezed. This softening is consistent with the easing input cost narrative in other indices assessing Nigeria’s business conditions in June, reflecting the fading effects of the Middle East energy shock in March.
The Macroeconomic Signal: Q2-26 Story
The PMI does not sit in isolation. Reading the Q2-26 PMI alongside key macroeconomic indicators – real GDP growth, inflation, the currency and the monetary policy rate – sends four signals about the state of the Nigerian economy.
Growth is positive, but narrow: The economy is expanding, but the breadth is thin – a bare majority of subsectors and a single sector doing the heavy lifting. This is consistent with our Q2-26 growth projection of 4.20% y/y – positive and marginally firmer than Q1-26 (3.89% y/y), yet slower than a year ago (Q2-25: 4.23% y/y).
Cost-push pressure is fading, which matters for the MPR path: The PMI price indices are easing, and the slowdown in m/m inflation (May-26: 1.75% vs April-26: 2.13%) suggests headline inflation is close to peaking. Given that the recent price pressures came from higher costs rather than stronger demand, we see little case for further rate hikes — the debate now is over the timing of the next rate cut.
The demand side has not confirmed the supply-side recovery: Output and employment are recovering ahead of new orders. Until the order book turns positive, the recovery is producer-led rather than demand-led – the distinction that determines whether it proves sustainable or fragile.
External stability is the standout strength: A stable naira, supported by a foreign exchange reserves buffer at a 17-year high (USD51.45 billion as of 8 July), is the firmest part of the macroeconomic picture. Both factors insulate the economy from external shocks and underpin the sustained investors’ confidence.
Written by Analyst(s)
Shakirudeen Taiwo
shakirudeen.taiwo@cordros.com
Esther Mayowa
esther.mayowa@cordros.com
Fuad Durodoye
fuad.durodoye @cordros.com
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