Cowry Asset Management Limited has issued a cautious outlook on Nigeria's economy following signs of weakening demand and slower business activity across key sectors. In its latest assessment of April 2026 purchasing managers' index (PMI) data, the firm noted that Nigeria's economic activity moderated significantly during the month.
PMI Falls Below Key Threshold
The composite PMI of the Central Bank of Nigeria (CBN) declined to 49.4 points in April, marking the first time in 16 months that the index fell below the critical 50-point threshold. This reading signals a technical contraction in private sector activity, according to Cowry Asset.
While the figures do not indicate a sharp economic downturn, they suggest that the economy is transitioning from steady expansion to a phase of slower growth. The decline reflects broad-based easing across key indicators, including new orders, output, and employment, all pointing to softer demand conditions.
Early Signs of Moderation
Cowry Asset warned that early signs of moderation are emerging, with declines in new orders and raw material stocks indicating that resilience in the sector could weaken if broader economic conditions remain subdued. Across the wider economy, the balance of activity tilted slightly negative: of the 36 subsectors surveyed, 16 recorded expansion, 19 contracted, and one remained unchanged.
The combination of slower growth and persistent price pressures creates added complexity for policymakers, as the economy faces weakening momentum alongside inflationary risks. The analysts warned that the softer growth environment could influence investor sentiment in the near term, with increased interest likely shifting toward fixed-income instruments.
Equities Market Outlook
In the equities market, Cowry Asset expects a clearer distinction to emerge between defensive stocks and cyclical names as investors reposition portfolios amid heightened caution. Looking ahead, the firm said PMI readings for May and June would be critical in determining whether April's contraction represented a temporary pause or the beginning of a more prolonged slowdown in Nigeria's economic trajectory.
