Analysts at Cowry Asset Management Limited have raised concerns over Nigeria’s near-term economic outlook following signs of weakening demand and slower business activity across major sectors of the economy.

According to the firm’s latest assessment of April 2026 purchasing managers’ index data, Nigeria’s economic activity moderated significantly during the month, with the composite PMI of the Central Bank of Nigeria (CBN) declining to 49.4 points.

The reading marked the first time in 16 months that the index would fall below the critical 50-point threshold, signalling a technical contraction in private sector activity.

Cowry Asset noted that while the latest figures do not point to a sharp economic downturn, they indicate that the economy is transitioning from a phase of steady expansion into one of slower growth. They said the decline reflects a broad-based easing across key indicators, particularly in new orders, output and employment, all of which suggest that businesses are facing softer demand conditions.

Cowry Asset warned that early signs of moderation were beginning to emerge, as declines in new orders and raw material stocks suggested that resilience in the sector might 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.

Cowry Asset said 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.

In the equities market, they expect 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 in activity or the beginning of a more prolonged slowdown in Nigeria’s economic trajectory.