Economy exits contraction but households remain pessimistic — CBN
Economic Report: Nigeria’s PMI Shows Signs of Recovery Amid Continued Pessimism
By Babajide Komolafe
Nigeria’s economy emerged from contraction in June, as the Purchasing Managers’ Index (PMI) climbed to 50.1 points from 49.6 points in May. This rebound was largely attributed to growth in the agriculture sector, according to the Central Bank of Nigeria (CBN) in its latest PMI report released yesterday.
Despite this positive shift, the accompanying Household Expectations Survey (HES) revealed persistent pessimism among Nigerians regarding current economic conditions. Although there is rising optimism about the medium-term outlook, immediate consumer sentiment remains subdued.
The PMI report focuses on corporate performance, while the HES targets household perspectives. The CBN noted that business confidence among Nigerian firms declined for the fourth consecutive month in June.
“The composite PMI rose to 50.1 points in June 2026, signaling a return to expansion in overall economic activity after May’s contraction,” the report stated. Among the 36 subsectors surveyed, 19 reported growth, whereas 17 experienced declines in activity.
The CBN highlighted agriculture as the key driver of recovery, with the Agriculture PMI increasing to 52.1 points in June from 50.9 points in May. This marks the 23rd consecutive month of growth for the sector, with all five agricultural subsectors showing positive trends. Forestry led the way in growth, according to the report.
In contrast, the manufacturing and services sectors continue to face challenges. The Industry PMI registered 49.5 points, indicating contraction, while the Services PMI was slightly lower at 49.4 points. Both sectors reflect ongoing declines in business activity.
Looking ahead, the CBN expressed cautious optimism about the broader economy. “Overall, the June 2026 PMI points to a modest recovery in economic activity, driven by sustained growth in agriculture, which offset declines in industry and services.”
The report indicated that both input and output price pressures have eased, with declines of 2.5 and 0.8 points, respectively, suggesting improved business conditions.
However, consumer sentiment remains largely negative. The HES report indicated that households continue to prioritize spending on food, postponing significant investments in housing and vehicles. The Overall Consumer Sentiment index was recorded at -14.6 points in June, a slight improvement from -16.8 points in May, but still reflective of a pessimistic outlook.
Households exhibited caution regarding larger expenditures. The report noted: “Households showed reluctance to allocate substantial portions of their income to major purchases, as indicated by negative sentiment indices.”
While immediate economic conditions appear challenging, there is a semblance of hope in future expectations. The HES noted a positive Consumer Confidence Index for September 2026 at 3.1 points, with expectations improving over the upcoming months, buoyed by forecasts of better family income and economic conditions.
Spending priorities remain focused primarily on essential items, such as food and transportation. The CBN reported that respondents consistently identified food as their top spending priority, projecting it to remain the focal point for the next six months.
