Stanbic IBTC Bank Nigeria PMI® Reports Continued Growth in July Amid Softening Inflation

Nigeria’s private sector maintained its upward momentum in July, with firms signaling a notable increase in new orders, according to the latest Stanbic IBTC Bank Nigeria PMI® report. While output and employment grew modestly, inflationary pressures showed signs of easing.

The key metric, the Purchasing Managers’ Index™ (PMI®), signals business health: readings above 50.0 denote expansion, while below 50.0 indicate contraction. In July, the Stanbic IBTC Bank Nigeria PMI Index registered at 52.5, down slightly from 53.4 in June but still reflecting a sixth consecutive month of growth. The index’s current level suggests steady improvement in business conditions, although the pace has moderated compared to previous months.

Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank, commented: “Nigerian businesses reported improved customer demand in July while better pricing and new product launches also helped them to capture new orders arising from the increase in demand. These factors helped to keep the private sector activity in an expansionary territory, although this moderated when compared to June. Notably, the headline PMI settled at 52.5 points in July after the 53.4 points recorded in June, presenting the slowest since March 2026. Businesses also increased their input purchasing activity, linking this to efforts to keep up with current demand requirements and prepare for future workloads.”

Despite rising input costs, inflationary pressures eased, with the pace of increase slowing to its lowest in five months. While input costs rose due to higher fuel and raw material prices, selling prices softened in line with this trend. Headline inflation declined slightly to 15.91% year-on-year in June from 15.93% in May, ending a streak of three months of rising prices. Although July’s inflation may see a month-over-month increase, analysts expect the annual rate to decline to around 15.72%, primarily driven by favorable base effects from last year’s comparable period.

Looking ahead, Stanbic IBTC Bank maintains its 2026 growth forecast at 4.1%. The oil sector is projected to grow by 3.45% year-on-year, down from 8.50% in 2025, while the non-oil sector is expected to expand by 4.11%, up from 3.71% last year. However, risks such as national insecurity, exchange rate pressures, climate-related challenges, and global economic volatility could impact this outlook.

The PMI’s headline figure of 52.5, although slightly lower than June, remains above the neutral 50.0 mark, signaling a sustained expansion in Nigeria’s private sector for the sixth month running. The most recent data reveals a solid, though slowing, improvement in business conditions.

New business orders continued their upward trajectory in July, supported by new product launches and competitive pricing strategies. This ongoing growth extended the six-month expansion streak, reflecting resilient demand conditions.

Business activity increased further, though modestly—the slowest pace since January—driven by sharp rises in agriculture and manufacturing output, with services and wholesale & retail sectors experiencing more moderate growth. Companies also responded to higher demand by modestly increasing employment levels, although the rate of hiring slowed to a three-month low.

Firms expanded their purchasing activity to meet current and future demand, with inventories rising accordingly. However, logistical challenges caused some delays, leading to a slight increase in backlogs of work. Supplier performance improved at the start of the third quarter, following a previous period of lengthening lead times.

Inflationary pressures softened in July, with both input costs and output prices rising at weaker rates. Purchase cost inflation slowed sharply, reaching its lowest point in five months, although raw material and fuel prices continued to push costs upward. Staff costs increased modestly, at the slowest pace since April.

Reflecting the softer input costs, companies increased their selling prices at the slowest rate since February. The agriculture sector saw the fastest rise in prices, while the services sector experienced the mildest inflation. Business optimism remains positive, with nearly half of respondents expecting output to grow over the next year—driven by marketing initiatives and expansion plans such as new branches. However, overall sentiment dipped slightly from June’s one-year high.