Nigeria's economy expands for a fourth straight month as the Composite PMI hits 53.0, even as household sentiment slumps

Nigeria's private-sector economy is in its strongest sustained run in years, according to the latest survey data from the Central Bank of Nigeria, but households are not yet feeling the benefit. The bank's September Purchasing Managers' Index recorded a Composite PMI of 53.0, up from 52.7 in August and marking the fourth consecutive month of expansion, even as a parallel survey found consumer sentiment deteriorating sharply.

The expansion, sector by sector

The September survey was conducted between 7 and 11 September among 1,900 purchasing and supply executives across industry, services and agriculture. Twenty-three of the 32 subsectors surveyed recorded expansion, with nine contracting. The industry segment strengthened to a PMI of 52.0 from 50.6 in August, its second straight month of expansion, while its output index rose to 53.2 on firmer new orders and hiring. Services stayed in expansion at 53.2, only marginally below August's reading. Agriculture eased slightly to 53.1 from 53.4 but remains the economy's most consistent performer, having now recorded 26 consecutive months of expansion.

The survey's price gauges provided a note of caution against premature celebration. Composite input prices accelerated in September, rising 0.8 points on the index, while output prices declined 0.5 points, a combination that squeezes producers' margins even as headline production expands. The central bank's own commentary on the readings acknowledged a broadening recovery while flagging renewed input-cost pressure as something that warranted close monitoring.

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Households ask where the growth is

The same month's Household Expectations Survey told a harder story. The overall consumer sentiment index fell to minus 18.7 points in September from minus 9.9 in August, indicating increased pessimism about economic conditions. The economic conditions sub-index stood at minus 21.5, the family financial situation index at minus 23.9 and family income sentiment at minus 10.5, meaning that in cash terms the average Nigerian household sees its own standard of living deteriorating even as the productive economy hums.

Price perception explains most of the divergence. Households' average price sentiment index rose to 33.5 points from 23.0 in August, showing that respondents perceive consumer prices as continuing to rise steeply. That is consistent with the official statistics: headline inflation eased to 14.63 per cent in September from 15.39 in August on the National Bureau of Statistics' new base, but food inflation, at 19.59 per cent, is running five points higher and dominates the actual out-of-pocket experience of most Nigerian families. Falling inflation simply means prices are rising more slowly, not that they have fallen, and that arithmetic explains the household gloom inside an expanding PMI.

Why both numbers can be true

Purchasing managers' indices measure the buoyancy of formal-sector firms, the same firms that access credit, import inputs and wait for exchange-rate stability to support planning. Households measure their experience in food prices, transport and school fees, the areas where inflation has been most persistent despite the official disinflation. The gap between a 53.0 PMI and a minus 18.7 consumer reading is the political economy of reform in real time: the reform agenda has produced the strongest business conditions in months, but the lived experience of the majority is still one of high prices.

The two readings will converge when food inflation falls faster than headline inflation, because food dominates household spending. Policy has pointed in that direction: the harvest season, improved security in farm belts and government interventions in input supply are all designed to bring the food component down rapidly. For now, though, the data describe an economy that is producing and hiring but has not yet shared the feeling at the kitchen table.

What to watch next is whether the expansion in industry translates into the employment and income data that would close the sentiment gap and whether the next CPI print pulls food inflation significantly lower. Both would signal that the recovery is broadening from the boardroom to the market. Until then, Nigeria enters the final quarter of the year with factories expanding, households pessimistic, and the credibility of the reform story resting on the pace at which the second group changes its mind.