Nigeria’s private sector witnessed its strongest employment growth since October 2023 as the Purchasing Managers’ Index (PMI) rose to 54.0 in July 2025, its highest in three months.
The PMI, compiled by S&P Global and released by Stanbic IBTC Bank on Friday, reflects a solid improvement in business conditions across the non-oil private sector, marking the eighth consecutive month of expansion.
The report read, “The headline figure derived from the survey is the 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 rose to a three-month high of 54.0 in July, up from 51.6 in June. The reading signalled a solid monthly improvement in the health of the private sector, extending the current sequence of expansion to eight months.”
According to the report, the surge in hiring was driven by faster increases in new orders and output, as firms ramped up capacity to meet rising demand while benefiting from a softening in inflationary pressures.
Hiring accelerates on stronger demand and output gains
Employment growth picked up notably in July, reaching a 21-month high, as firms responded to a sharp and accelerated rise in new business volumes.
Survey respondents attributed the increase in new orders to improved customer demand and, in some cases, the successful launch of new products.
Output levels rose in tandem, supported by these higher orders, making July the strongest month for both indicators since April.
To meet this growing workload, firms expanded staffing levels. The additional workforce allowed businesses to stabilise their backlogs after three months of increases.
While the overall rise in employment contributed to higher staff costs, the report also notes that wage pressures were exacerbated by firms’ efforts to support employees facing elevated transport expenses. This staff cost inflation hit a five-month high, contrasting with the broader easing of input cost pressures.
The report read, “Rising new orders and efforts to speed up the completion of projects encouraged firms to take on extra staff at the fastest pace since October 2023. Extra workforce capacity meant that companies were able to keep backlogs of work broadly stable, following increases in each of the prior three months.”
Input cost inflation eases, enabling stock accumulation
Purchase price inflation slowed for the third consecutive month in July, marking the weakest rate of increase since April 2020. Despite ongoing cost pressures from currency depreciation and raw material inputs, firms experienced a notable softening in cost inflation, allowing them greater flexibility in sourcing and purchasing. As a result, purchasing activity rose sharply in line with the demand surge.
This increase in buying activity contributed to a marked accumulation of inventories during the month. Stock building was further aided by improved supplier performance, as vendors recorded shorter delivery times—reversing the delays seen in previous months.
Selling prices also rose at a slower rate in July, with output price inflation easing for the third month in a row to its lowest level since May 2023. Some firms reported that they were able to pass on the benefit of softer purchase prices to customers by offering discounts to stimulate sales and secure more business in a competitive market environment.
Business outlook softens despite strong Q3 start
Despite the positive indicators regarding demand, output, and hiring, overall business sentiment moderated slightly in July from the near three-year high recorded in June.
Nonetheless, the report noted that firms remained broadly optimistic that output would continue to rise over the next 12 months. Those expecting growth cited plans to raise capital, expand business operations, and step up advertising as part of their strategy.
The report read, “Companies remained optimistic that output will rise over the coming year, but sentiment eased from the near three-year high posted in June. Those firms that predicted an increase in output linked this to plans to raise capital for business expansions and advertising.”
The slight dip in confidence may reflect underlying caution among businesses about macroeconomic stability, particularly given the persistent currency volatility and cost pressures that continue to weigh on operations.
Still, the July PMI results suggest a strong start to the third quarter for Nigeria’s non-oil economy. Improvements across all five key components—output, new orders, employment, stocks of purchases, and suppliers’ delivery times—point to increasing momentum in private sector activity.
The data, collected between July 10 and 29, captures a snapshot of an economy navigating challenges but finding pockets of resilience and growth through strategic workforce expansion and operational adjustments.
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