Nigeria's industrial sector returned to growth in August after four months of contraction, but the recovery underneath the headline is narrow.

The Central Bank's industry PMI came in at 50.6 — just above the line that separates expansion from decline. Of the sector's subsectors, five expanded and eleven contracted.

Oil refining recorded the strongest growth of any industrial subsector. Motor vehicles posted the steepest decline.

Two different economies

That split describes the Nigerian industrial picture fairly well. Refining has benefited from domestic capacity coming online and from a policy environment built around reducing imported fuel. Vehicle assembly depends on imported components, consumer credit and household confidence, and has little of any of them.

A stronger naira should, in theory, help importers of parts. In practice the effect takes months to reach order books, and manufacturers have said the binding constraint is the cost of borrowing rather than the exchange rate.

At a benchmark rate of 26.50 per cent, held for a second consecutive meeting in July, working capital remains expensive.

The wider reading

The composite PMI rose to 52.7 in August from 51.1 in July, its best reading in 29 months, carried mainly by agriculture at 53.4 and services at 53.3.

Agriculture has now expanded for 25 consecutive months, the longest unbroken run of any sector in the survey.

Reporting by Nairametrics. This summary was written by the TalkNaijaMedia desk.