Nigeria’s Private Sector Growth Accelerates to 19-Month High, PMI Indicates
Nigeria’s private sector continued its upward trajectory in August, as improving customer demand and easing inflationary pressures fueled growth. The latest data from the Stanbic IBTC Bank Nigeria Purchasing Managers’ Index™ (PMI®) shows a notable increase in new orders, reaching its highest level in 19 months, and a sustained rise in business activity for the ninth consecutive month.
Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank, remarked: “Business activity remained robust in August, staying above the 50-point threshold for nearly a year. The growth was mainly driven by sharper increases in output and new orders, with output rising to 56.8 points from 56.1 points in July, reflecting increased client commitments to new projects. New orders surged to 58.3 points, up from 57.3 in July, marking the highest growth rate since December 2021. This demand boost prompted firms to expand staffing levels for the third month running.”
The survey also highlighted positive outlooks, with firms optimistic about future output, supported by plans to open new branches and ramp up marketing efforts. Meanwhile, input costs declined to their lowest level since March 2023, easing inflationary pressures. As a result, output prices grew at the slowest pace since April 2020, suggesting inflation will remain subdued in the near term. Stanbic IBTC estimates that headline inflation may further moderate in August to around 21.45%, with potential declines to below 18% by November.
Looking ahead, analysts expect the Central Bank of Nigeria (CBN) to consider an accommodative monetary policy stance, potentially cutting interest rates by up to 150 basis points in 2025. Nigeria’s rebased GDP figures show a 3.13% year-on-year growth in Q1 2025, slightly slower than the 3.76% growth in Q4 2024. The services sector led the growth, contributing 78.6% to GDP, while agriculture contracted significantly. Manufacturing and industry sectors, however, demonstrated strong growth, with industry contributions rising from 10.4% to 20.9%, driven by the operations of the Dangote Refinery.
The PMI reading for August stood at 54.2, signaling ongoing expansion in Nigeria’s private sector. Although slightly higher than July’s 54.0, the data reflects the strongest performance since April, driven by increases in output and new orders. Firms reported stronger customer demand and a willingness to commit to new projects, although employment growth remained modest. Purchasing activity slowed somewhat, but firms continued to increase inventories amid positive future outlooks.
Inflationary pressures continued to ease, with input costs and staff wages rising at the slowest pace in months. Companies passed higher costs onto customers, but the rate of output price inflation slowed markedly, indicating a more balanced pricing environment. Overall, the Nigeria private sector remains resilient, with prospects of sustained growth supported by structural reforms and improving economic fundamentals.