Nigeria’s economic activity strengthened in August, but the improvement masks a fragile industrial recovery, with 11 of the 16 industrial subsectors surveyed still operating in contraction.
The warning is contained in the Central Bank of Nigeria’s (CBN) August 2026 Purchasing Managers’ Index (PMI), a monthly survey that tracks whether business activity is expanding or shrinking.
The overall PMI rose to 52.7 points in August from 51.1 points in July, marking the third straight month of expansion. But the stronger headline figure was driven mainly by agriculture and services, while most industrial activities remained weak.
The industry PMI returned to expansion at 50.6 points, its first recovery in 2026 after industrial activity had contracted since April. However, the sector’s improvement was narrow, with only five of the 16 industrial subsectors recording growth.
“Overall, the August 2026 PMI results point to a modest recovery in overall economic activity, driven by sustained expansion in the Services and Agriculture sectors, alongside a gradual recovery in the Industry sector,” the CBN said.
The central bank also highlighted the uneven nature of the industrial recovery.
“The Industry PMI at 50.6 points in August 2026 indicates recovery from the contractions recorded in industrial activity since April 2026. A breakdown of the sector showed that 11 of the 16 subsectors surveyed recorded a decline, while the remaining 5 subsectors expanded.”
That divergence raises questions about how broad and sustainable the recovery is, particularly for businesses that depend on manufacturing, construction, utilities and industrial supply chains.
The weakest industrial subsector was Motor Vehicles and Assembly, which recorded 34.6 points. Non-metallic products followed at 41.3 points, while electricity, gas, steam and air conditioning supply stood at 42.9 points. Chemical and Pharmaceutical Products recorded 43.9 points, while Plastic and Rubber Products posted 46.8 points.
Other subsectors in contraction were Wood and Wood Products at 47.2 points, Water Supply, Sewerage and Waste Management at 47.6 points, Cement at 47.7 points, Pulp, Paper and Paper Products at 48.5 points, Construction at 48.7 points, and Textile, Apparel and Footwear at 49.3 points.
The problem goes beyond the number of subsectors in decline. Industrial production rose to 51.4 points, but new orders remained below the 50-point mark at 49.0 points. New orders measure fresh demand for goods and services, while the 50-point threshold separates expansion from contraction.
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This means factories may be producing more even though new demand has not yet recovered fully. Stocks of raw materials also remained in contraction at 49.0 points, suggesting that businesses are not building up supplies strongly enough to support a broad-based industrial expansion.
The wider economy provides a more positive picture, as agriculture recorded 53.4 points, extending its growth streak to 25 consecutive months, with all five subsectors expanding.
Services also remained in expansion at 53.3 points, with nine of its 11 subsectors recording growth.
Industry’s recovery, by contrast, was concentrated in a few areas. Oil refining led with 66.5 points, followed by metal ores at 61.3, mining and quarrying at 59.5, electrical and electronics at 59.5, basic metal, iron and steel at 54.6, and food, beverage and tobacco at 51.7 points.
Another concern for businesses is the continued pressure from rising costs. The overall input price index, which measures the cost of materials and other inputs used by businesses, eased slightly by 0.2 points to 62.5.
However, it remained well above the output price index of 58.9 points, which measures the prices businesses charge for their products and services.
The gap suggests that businesses are still facing pressure on profit margins because their costs are rising faster than the prices they are able to charge.
The pressure was visible across agriculture, services and industry.
Agriculture recorded an input price index of 64.8 against an output price index of 58. 2. Services recorded 61.9 against 59.4, while industry recorded 61.7 against 58.7.
The CBN said, “In August 2026, the input price indices for the Composite PMI fell by 0.2, while output prices rose by 1.0 points. The Services and Agriculture sector month-on-month changes in the output prices were greater than their corresponding input price indices.”
Weak foreign demand adds another layer of risk, as new export orders remained in contraction at 47.6 points, with industry at 45.9, services at 47.7 and agriculture at 49.7 points. New import orders were also weak at 47.1 points.
The services sector, despite its overall recovery, also showed pockets of weakness. Broadcasting recorded 41.3 points, and professional, scientific and technical services 47.6 points, while transportation, courier and storage stood at 49.2 points.
The data also suggest that some businesses are clearing existing orders faster than they are receiving new ones.
Outstanding business, or unfinished orders waiting to be completed, fell to 47.9 points. The industry recorded the weakest reading at 44.8 points, compared with 49.2 in services and 49.1 in agriculture.
For policymakers, the August figures therefore present a mixed picture. The rise in the composite PMI shows that economic activity is improving, but the industrial data suggest that the recovery has yet to spread widely across productive businesses.
Analysts say the key test in the coming months will be whether the five industrial subsectors currently expanding can pull the wider industrial economy along, or whether the 11 subsectors still in contraction continue to weigh on manufacturing, construction, utilities and other industrial activities.
For businesses and investors, the August PMI is therefore less a story of a broad industrial rebound than one of an economy improving at different speeds, with industry still struggling beneath the headline recovery.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X