Nigeria’s private sector sustained its growth momentum at the start of the second quarter, as stronger customer demand and rising new orders continued to support business activity, despite persistent inflationary pressures.
The latest Purchasing Managers’ Index (PMI) by Stanbic IBTC Bank showed that the headline index rose to 52.4 in April, up from 51.9 in March, marking the third consecutive month above the 50.0 threshold, which separates expansion from contraction.
The uptick reflects a solid improvement in overall business conditions, with the pace of growth slightly stronger than in the previous month.
Demand Growth Drives Expansion
The April PMI data indicates that improving demand conditions remained central to the expansion. Businesses reported higher customer numbers, which translated into increased new orders and a corresponding rise in output.
However, the growth trajectory was not without constraints. Inflationary pressures, particularly those linked to higher fuel costs driven by the ongoing Middle East conflict, continued to weigh on business operations. These cost pressures moderated the pace of expansion in both new orders and overall activity.
Despite these challenges, output levels increased at a solid pace, slightly exceeding March’s performance. Growth was recorded across most sectors, although the services sector lagged behind.
Rising Costs Shape Business Decisions
Input costs remained elevated in April, with firms reporting significant increases in fuel and raw material prices. Purchase price inflation remained close to March’s 15-month high, underscoring the persistence of cost pressures.
In response, companies adjusted their pricing strategies. Selling prices rose sharply, reaching their highest level since December 2024, as businesses passed on increased costs to consumers.
Staff costs also edged higher, albeit modestly, as some firms raised wages to cushion employees against rising transportation expenses.
Employment and Capacity Pressures
While firms responded to higher workloads by hiring additional staff, the pace of job creation remained marginal and the weakest in three months. Capacity constraints persisted, with some companies citing staff shortages, delayed customer payments, and supply chain challenges.
As a result, backlogs of work increased for the third consecutive month, reflecting ongoing pressure on operational capacity.
Purchasing Activity and Supply Chains
Companies continued to ramp up purchasing activity, extending the current expansion streak to 17 consecutive months. Inventory levels also rose significantly, supported by stronger demand and efforts to secure materials amid price volatility.
Encouragingly, supplier performance showed slight improvement, with lead times shortening, although at the slowest pace recorded so far in 2026. Timely payments by firms helped facilitate smoother deliveries.
Business Confidence Improves
Business sentiment strengthened in April, with companies expressing optimism about future growth. Many firms outlined plans to expand operations through new branches, increased inventory, and entry into new markets.
Notably, about half of surveyed businesses expect output to rise over the next 12 months, reflecting improving confidence in the economic outlook.
Expert Insight and Economic Outlook
Commenting on the data, Muyiwa Oni, head of Equity Research, West Africa at Stanbic IBTC Bank, noted that the sustained expansion reflects resilient demand conditions, even as inflation continues to shape business decisions.
He added that the strong start to Q2 reinforces expectations of improved economic performance in 2026. The Nigerian economy is projected to grow by 4.22% year-on-year in 2026, up from 3.87% in 2025, driven largely by the non-oil sector.
The services sector is expected to remain a key growth driver, while ongoing government investment across critical sectors, including oil and gas, agriculture, manufacturing, and infrastructure, is likely to further support economic activity.
However, growth in the oil sector is projected to moderate, with output expected to average 1.70 million barrels per day, compared to 1.64 million barrels per day in 2025.
- Nigeria’s PMI reading of 52.4 in April underscores a resilient private sector, supported by improving demand and business optimism. While inflationary pressures, particularly fuel-related costs, continue to pose challenges, the overall trajectory points to steady economic expansion and strengthening business confidence in the months ahead.
