Nigeria’s Business Activity Grows in May, but Momentum Slows to Four-Month Low, Says Stanbic IBTC PMI
Nigeria’s private sector continued to expand in May, marking the sixth consecutive month of growth, according to the latest Stanbic IBTC Bank Purchasing Managers’ Index™ (PMI®). However, the pace of expansion slowed compared to previous months, signaling a potential easing of economic momentum amid persistent inflationary pressures.
The PMI registered 52.7 in May, indicating continued improvement in business conditions (readings above 50.0 denote growth). While this figure remains above the threshold, it declined from 54.2 in April, representing the weakest expansion since January.
Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank, noted, “Business conditions remain in expansion territory, supported by increased customer demand and new product launches. Nonetheless, the rate of growth has slowed compared to April, suggesting a softening of market conditions. New orders have increased steadily since November 2024, but the growth rate in May was the slowest in four months.”
The survey revealed that increased sales and customer footfall led companies to ramp up their purchases for the sixth month in a row, with inventory accumulation reaching a three-month high. Despite this, input costs remained elevated, driven by higher raw material prices, currency depreciation, and rising transportation expenses. As a result, companies passed on some of these costs to consumers, although output price inflation slowed to a two-year low in May, partly due to some firms lowering prices to attract customers.
Sector-wise, output grew across wholesale & retail and manufacturing, with these sectors experiencing the sharpest increases. However, inflationary pressures persisted, with cost increases outpacing wage growth, which itself saw only a modest rise—the slowest since March 2023. Notably, employment contracted for the first time in six months, as some firms faced difficulties paying staff leading to resignations.
Backlogs of work increased for the second consecutive month, with delays in customer payments cited as a key factor. The rise in outstanding business was the sharpest since February 2023. Despite employment declines, firms continued to boost purchasing activities to meet current and future client demands, which also resulted in stocks of purchases rising at the fastest rate in three months.
Supplier delivery times improved, though the pace of shortening was the slowest in 2025 so far. Business confidence declined for the fourth straight month, ranking among the lowest on record, primarily due to concerns over inflation, currency fluctuations, and global economic conditions. Nevertheless, firms remained optimistic about future output, citing expansion plans, marketing efforts, and inventory restocking.
Looking ahead, analysts expect Nigeria’s economy to grow by approximately 3.5% in 2025, slightly edging out the 3.4% growth recorded in 2024, supported by softer inflation and potentially lower interest rates.
**Summary:** Nigeria’s private sector continues to grow but at a decelerating rate amid ongoing inflation and operational challenges. Business outlook remains cautiously optimistic despite subdued confidence levels.