Input cost inflation in Nigeria slowed to its weakest pace in 10 months in March 2025, as businesses reported softer increases in both purchase prices and staff costs, according to the latest Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) report.
The report read, “Although overall input costs continued to rise sharply, the pace of inflation eased for the fifth month running and was the slowest since May 2023. Both purchase prices and staff costs increased at slower rates at the end of the opening quarter of the year.”
It also noted that the headline PMI rose to 54.3 from 53.7 in February, marking the highest reading since January 2024. This also marked the fourth consecutive month of improvement in business conditions.
According to the report, the easing inflationary pressures have significantly supported domestic demand conditions, allowing private sector activity to strengthen further.
“Softening inflationary pressures are helping to improve domestic demand conditions, in turn, supporting an overall improvement in private sector activity in Nigeria.
“Consequently, private sector activity strengthened for the fourth consecutive month, with the headline PMI settling higher at 54.3 points in March from 53.7 points in February – its highest print since January 2024 (54.5 points),” said Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank.
Despite the moderation in input costs, firms continued to experience notable rises in both purchase prices and staff costs.
However, the pace of these increases was slower compared to previous months.
The reduction in inflationary pressure also allowed companies to ease the rate at which they increased selling prices, marking the third successive month of softer output price inflation.
Growth in output and new orders
Alongside cooling inflation, the private sector witnessed a marked increase in output and new orders.
- The rate of growth in new orders accelerated to its highest level in 14 months, driven by stronger customer demand and increased client requests.
- As demand increased, output growth also gained momentum, marking the sharpest expansion since January 2024.
- All four monitored sectors—agriculture, manufacturing, construction, and services—reported improved output levels during the month.
Employment and purchasing activity
The positive business environment also encouraged firms to expand their workforce, with March marking the fourth consecutive month of job creation.
- The pace of employment growth was the most marked since August 2024, though some firms opted for contract hiring to meet increased workload demands.
- Purchasing activity increased for the fourth straight month, although the rate of expansion was slightly slower than in February.
- Companies aimed to build inventories in anticipation of future business needs, particularly as input costs softened, enabling some firms to stockpile raw materials and other inputs.
- Suppliers’ delivery times continued to shorten, though the improvement was less pronounced compared to the previous month.
Businesses attributed this to prompt payments and favorable road conditions. Faster delivery times allowed companies to maintain a steady flow of inputs to support production.
Business confidence moderates
Despite the overall positive performance, the report highlighted a dip in business confidence, which fell to a three-month low.
- The cautious sentiment among firms reflected concerns about potential challenges in the business environment.
- Nonetheless, some companies remained optimistic about future output, citing planned investments, advertising efforts, and the opening of new branches as factors likely to support growth.
- Looking ahead, the PMI report suggests that private sector activity in the first quarter of 2025 outperformed the previous quarter, consistent with expectations of a 3.9% year-on-year growth in the non-oil sector.
For the entire year, Stanbic IBTC forecasts a 3.4% growth rate in the non-oil sector, supported by stable foreign exchange conditions and improved liquidity.
“Therefore, we still expect the Nigerian economy to grow by 3.5% y/y in real terms in 2025 with the Q1:25 growth print forecasted to settle at 3.7% y/y,” Oni noted.
The projected reduction in borrowing costs is expected to bolster the real sector further, including manufacturing, trade, and real estate.
