Effects of Macroeconomic Factors on the Profitability of Listed Manufacturing Firms in Nigeria

This study examines the relationship between selected macroeconomic factors and the profitability of listed manufacturing firms in Nigeria. The study uses a balanced panel of 10 listed manufacturing firms observed annually from 2011 to 2020, producing 100 firm-year observations. Profitability is measured by return on assets (ROA), while the explanatory variables are interest rate, inflation, exchange rate, unemployment, international trade, domestic investment and business cycle. Secondary data were obtained from audited annual reports of the selected firms and macroeconomic sources including the World Bank and Central Bank of Nigeria. An ex-post facto and correlational research design was adopted, and the empirical analysis was conducted using panel generalized least squares with cross-section random effects. The results show that interest rate has a negative but statistically insignificant association with ROA (β = −0.838, p = 0.6244); inflation is negative and insignificant (β = −0.091, p = 0.8746); exchange rate is positive and insignificant (β = 0.019, p = 0.7501); and unemployment is negative and insignificant (β = −0.075, p = 0.9644). International trade has a negative and statistically significant association with profitability (β = −0.313, p = 0.0003). Business cycle is positive but insignificant (β = 1.024, p = 0.2851), while domestic investment is positive but insignificant (β = 0.208, p = 0.4868). The model is jointly significant (F = 4.1684, p = 0.000501) and explains approximately 24.1% of the weighted variation in ROA. The findings indicate that international trade exposure warrants particular attention in efforts to strengthen the profitability resilience of Nigerian manufacturing firms, while the other estimated relationships should be interpreted as conditional statistical associations rather than established individual effects.