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.

According to the latest Stanbic IBTC Purchasing Managers’ Index (PMI), business conditions remained comfortably in expansion territory for the tenth consecutive month, a sign that the country’s economy is not just stabilizing, but steadily finding its rhythm.

Though the headline PMI eased slightly to 53.4 in September from 54.2 in August, it still reflected a solid strengthening of the private sector. Behind this figure is a story of businesses pushing forward despite headwinds: output rose sharply across sectors, customer demand improved, and new product launches kept orders flowing.

Perhaps most encouraging is the cooling of inflationary pressures. For the first time in more than five years, companies reported their purchase costs rising at the slowest pace, allowing firms to expand production without the heavy burden of surging expenses. This easing cost environment also spurred job creation, with employment levels climbing at the fastest rate since late 2023.

“We’re seeing Nigerian businesses end the quarter on strong footing,” said Muyiwa Oni, head of Equity Research West Africa at Stanbic IBTC Bank. “The PMI numbers reflect improved output, new orders, and softer inflationary pressures. Even though the pace of growth moderated from August, the overall outlook remains positive.”

Beyond the PMI data, the broader economy is reflecting momentum. Nigeria’s GDP grew by 4.23% year-on-year in Q2 2025, driven by robust gains in agriculture and oil, alongside strong contributions from ICT, finance, and real estate. Analysts are now projecting GDP growth of 4.5% in Q3 2025, with a full-year forecast revised upward to 4.0% from 3.5%, thanks to rebasing and better-than-expected sectoral performance.

For businesses on the ground, these numbers translate into cautious optimism. Firms are hiring more, building inventory, and investing in expansion. Input costs, while still rising, are at their softest levels since early 2020, giving companies room to plan long-term.

Looking ahead, Nigeria’s private sector appears poised to keep momentum into 2026, supported by expectations of lower interest rates, easing inflation, and a more stable exchange rate. While challenges remain, the trend lines suggest a business environment slowly tilting toward growth and opportunity.

At 54.2 points, up from 54.0 in July, the PMI signals the ninth consecutive month of expansion and the strongest improvement since April. For context, any reading above 50 points indicates growth in business activity.

For many Nigerian firms, August wasn’t just another month, it was a turning point. The report shows that new order growth soared to its highest level in 19 months, reflecting customers’ renewed willingness to invest in new projects.

This surge, in turn, pushed output to its own four-month high, keeping service and industrial firms particularly busy. Manufacturing, however, lagged behind.

“Business activity increased further in August and has remained above 50 points for the ninth consecutive month,” noted Muyiwa Oni, head of Equity Research, West Africa at Stanbic IBTC Bank. “The increase was driven by sharper increases in output and new orders. Notably, new orders quickened to a 19-month high amid reports of increasing customer demand.”

Why It Matters

• Jobs & Staffing: Firms responded to the higher demand by expanding staffing for the third month in a row. However, job creation slowed compared to July.
• Inflation Relief: Input costs rose at the slowest pace since March 2023, while output price inflation eased for the fourth straight month, now at its lowest since April 2020. This moderation hints at a possible shift in the Central Bank’s monetary policy towards a more accommodative stance in September.
• Future Outlook: While business confidence softened slightly, optimism remains alive. Companies cited branch expansions, marketing campaigns, and rising orders as reasons to believe growth will continue into 2026.

The Bigger Economic Picture

Nigeria’s economy is still charting a steady course. Real GDP grew by 3.13% y/y in Q1 2025, slightly slower than Q4 2024 but bolstered by the industrial sector’s rising contribution, a shift largely attributed to the operations of the Dangote Refinery. Services remain the backbone, while agriculture slowed.

With softer inflation, improved FX liquidity, and structural reforms, analysts project GDP growth of 3.5% in 2025, edging up from 3.4% in 2024.

Bottom Line

The August PMI results paint a picture of resilience and cautious optimism. Nigeria’s private sector is not only holding steady but showing signs of acceleration, particularly in demand and output.

If inflationary pressures continue to ease, businesses and consumers alike could breathe easier, and the economy may yet surprise on the upside in 2025.

Rates of expansion remained slower than the respective series averages, however, as high prices continued to limit demand.

That said, there were further signs of inflation leveling off, with both purchase costs and selling prices rising at the slowest rates for a year.

The headline figure derived from the survey is the Stanbic IBTC Purchasing Managers’ Index (PMI).

Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.

The headline PMI posted 52.1 in May, up from 51.1 in April and the highest since January. The latest reading signaled a modest improvement in business conditions in the Nigerian private sector, but one that was still less pronounced than the historical trend.

New orders increased solidly in May, extending the current sequence of growth to six months. Business activity was also up, and to the largest extent since January.

Muyiwa Oni, head of Equity Research West Africa at Stanbic IBTC Bank commented:

“The Stanbic IBTC headline PMI increased to 52.1 points in May from 51.1 in April – its highest level since reaching 54.5 points in January.

“This implies that Nigeria’s private sector activity maintained a better footing in May even as the rate of expansion remained slower than the series average as high prices continued to limit demand. Nonetheless, the purchase costs and selling prices increased at their slowest rates in a year, thereby supporting a sharper increase in both output and new orders relative to April”.

The Nigerian economy grew moderately by 2.98% y/y in Q1:24 from 3.46% y/y in Q4:23. From a structural perspective, the services sector remains the growth engine of this economy, contributing 83.2% to the real GDP growth rate, with industries and agriculture contributing 15.5% and 1.3% respectively to the real GDP growth.

As expected, the interest rate sensitive sectors experienced a slowdown in growth safe for the Manufacturing sector whose growth improved modestly, to 1.49% y/y, from 1.38% y/y in Q4:23 – albeit still lagging the 3-year average growth (2.40% y/y).

“The April and May headline PMIs point to a slight improvement in private sector activity in Q2:24, although still underwhelming compared to Q2:23.

“We expect domestic demand to remain weak relative to historical average, exacerbated by inflationary pressures which may likely peak in May. Besides, interest rates at unprecedented highs will continue to have a negative passthrough impact on the non-oil sector. However, because of an expected favorable base-effect induced oil sector’s growth, the overall economy is on course to grow by 3.51% y/y in real terms in Q2:24.”

Growth was recorded across all four monitored sectors, with the sharpest rise in manufacturing.

Anecdotal evidence pointed to improving customer demand amid signs of inflationary pressures easing. Although purchase costs continued to increase rapidly in May, largely due to currency weakness, the rate of inflation eased to a one-year low.

This was also the case with regard to selling prices. Staffing levels were broadly unchanged again, but efforts to help existing workers with higher living costs meant that employee expenses increased at a solid and accelerated pace midway through the second quarter.

The improvement in customer demand seen in May encouraged companies to expand their purchasing activity.

This, allied with positive expectations for future workloads, also led to an increase in inventories. Both input buying and stocks of purchases rose more quickly than in April.

Despite efforts to secure additional inputs, still high prices for materials meant that firms sometimes struggled to accumulate the necessary items to complete projects.

As a result, backlogs of work increased for the third consecutive month. Suppliers’ delivery times continued to shorten, with improved vendor performance linked to a range of factors including prompt payments and good arrangements with vendors in a competitive environment.

Lead times have shortened in each month since March 2023. Despite stronger expansions in output and new orders in May, business confidence waned and was the lowest since the survey nadir posted in February.

More than 43% of respondents remained optimistic in the year-ahead outlook for output, however, linked to plans for investment and business expansions, including the opening of new branches.