Analysts at Cowry Asset Management Limited have raised concerns over Nigeria’s near-term economic outlook following fresh signs of weakening demand and slowing business activity across key sectors.
In its latest assessment of April 2026 data from the Central Bank of Nigeria, the firm noted that the composite Purchasing Managers’ Index (PMI) declined to 49.4 points, marking the first drop below the 50-point benchmark in 16 months—a threshold that separates economic expansion from contraction.
The analysts said the development signals a technical contraction in private sector activity, indicating that the economy may be shifting from a period of sustained growth into a slower expansion phase rather than entering a sharp downturn.
According to the report, the moderation reflects a broad-based weakening across key indicators, particularly new orders, output, and employment levels. These trends suggest that businesses are beginning to experience softer demand conditions.
Cowry Asset further warned that early signs of fragility are emerging, with declines in new orders and raw material inventories pointing to potential weakening resilience if broader macroeconomic conditions remain subdued.
Data from the PMI survey showed a slightly negative balance across the economy, with 19 of the 36 subsectors contracting, 16 expanding, and one remaining unchanged during the period under review.
The firm highlighted that the combination of slowing growth and persistent inflationary pressures presents a complex challenge for policymakers, as efforts to stimulate economic activity must be balanced against the need to contain rising prices.
The analysts also noted that the evolving macroeconomic environment could influence investor behaviour in the short term. They expect a potential shift toward fixed-income instruments, as investors adopt a more cautious stance.
Within the equities market, Cowry Asset projected a growing divergence between defensive stocks and cyclical assets, as portfolio adjustments reflect heightened uncertainty and risk sensitivity.
Looking ahead, the firm emphasised that PMI readings for May and June will be critical in determining whether April’s contraction represents a temporary slowdown or the beginning of a more sustained weakening in Nigeria’s economic trajectory.
