Nigeria’s Private Sector Grows Steadily as Inflation Eases, Stanbic IBTC Nigeria PMI Shows
Nigeria’s private sector maintained a steady growth trajectory at the end of the third quarter, with notable rises in output and new orders. The pace of employment growth accelerated to its fastest in nearly two years, supported by a continued easing of inflationary pressures, which persisted into September. Purchase costs increased at the slowest rate in over five years, alleviating some of the cost pressures faced by businesses. The key measure used to gauge business conditions, the Stanbic IBTC Purchasing Managers’ Index™ (PMI®), remained above the 50.0 threshold for the tenth consecutive month in September, indicating ongoing expansion.
The PMI stood at 53.4 in September, down slightly from 54.2 in August, but still signifying a solid improvement in Nigeria’s private sector health. The rise in new business was driven by stronger customer demand and the launch of new products, although the rate of growth slowed to a three-month low. This increase in new orders contributed to a sharp expansion in overall business activity across all four sectors surveyed. Firms responded by increasing their capacity, hiring more staff—at the fastest rate since October 2023—and boosting purchasing activity. Inventory levels also rose as companies stocked up to meet current and future demand, with suppliers’ delivery times shortening markedly, the fastest in five months.
Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank, remarked: “Nigeria’s business environment ended the quarter on a positive note, although the rate of growth has moderated compared to August. The PMI at 53.4 reflects ongoing expansion driven by improved output and new orders, supported by softer inflationary pressures. Output growth remained strong despite a slight slowdown, aided by better availability of materials and increased customer demand. This enabled firms to introduce new products and sustain growth in new orders, which remained above the 50.0 mark for the eleventh consecutive month, although at a three-month low.”
Nigeria’s economy grew by 4.23% year-on-year in Q2 2025, up from 3.13% in Q1, bringing the first half of the year to an average growth rate of 3.69%. The stronger performance was primarily driven by the agricultural sector (growing 2.82% y/y) and oil sector (up 20.46% y/y), which together contributed 35.6% to overall GDP growth. Other sectors, including ICT, finance and insurance, real estate, and trade, also contributed positively, though their growth rates varied.
Looking ahead, the non-oil sector is expected to maintain robust growth into 2026, supported by potential reductions in interest rates and low inflation, which should bolster aggregate demand and private investment. Additionally, a reduction in exchange rate volatility over the coming years is likely to benefit trade, manufacturing, real estate, and construction sectors. Based on the PMI for Q3 2025 and crude oil production levels, sector growth could reach 14.3% for oil and 4.4% for non-oil, leading to an overall GDP growth forecast of 4.5% for Q3. Consequently, the bank has revised its 2025 growth projection upwards to 4.0%, from 3.5%, factoring in the recent GDP rebasing and strong Q2 results.
In September, inflationary pressures continued to ease, with input prices rising at the slowest pace since March 2020. Both purchase prices and staff costs increased at subdued rates, although overall input costs still rose markedly, prompting firms to raise their selling prices. Despite a slight uptick from August, output price inflation remained the second slowest in over five years. Business optimism for the coming year remained positive but dipped to a four-month low, indicating cautious confidence among firms.