Nigeria’s private sector recorded its strongest expansion in over a year and a half, as the Stanbic IBTC Bank Purchasing Managers’ Index (PMI) rose to 54.2 in August, up from 54.0 in July, marking a 19-month high in new order growth and a four-month high in output.
The PMI reading, which has remained above the 50.0 threshold for nine consecutive months, signals sustained improvement in business conditions.
The August uptick reflects sharper increases in output and new orders, driven by rising customer demand and a greater willingness among clients to commit to new projects.
Sector Performance and Business Sentiment
According to the survey, output increased across three of the four sectors, namely services, construction, and agriculture, with manufacturing being the only laggard.
Firms responded to higher demand by expanding staffing levels for the third consecutive month, although the pace of job creation softened compared to July.
Purchasing activity also slowed, but input buying remained strong as businesses accumulated inventories in anticipation of future growth. Companies were able to clear backlogs for the first time in five months, indicating improved operational efficiency.
Despite the robust performance, business confidence eased for the second month in a row. Firms remain cautiously optimistic, citing plans to open new branches and ramp up marketing efforts as key drivers of future output growth.
Inflationary Pressures Continue to Ease
A notable feature of the August report was the continued moderation of inflationary pressures. Input costs rose at the slowest pace since March 2023, while output price inflation declined for the fourth consecutive month, reaching its lowest level since April 2020.
Staff cost inflation also eased to a three-month low. Where wage increases occurred, they were attributed to incentives for faster project delivery and cost-of-living adjustments.
Muyiwa Oni, Head of Equity Research, West Africa at Stanbic IBTC Bank, noted:
“The continued moderation of input and output prices suggests that inflation is likely to remain soft in the near term. This may incentivize the Monetary Policy Committee (MPC) of the Central Bank of Nigeria to adopt a more accommodative stance by September.”
Stanbic IBTC projects headline inflation to moderate further in August to between 21.45% and 21.63% year-on-year, with a sharper decline expected by November, potentially settling between 17.19% and 17.92%. The bank anticipates up to 150 basis points in cumulative rate cuts in 2025.
What You Should Know
- The Stanbic IBTC Bank Nigeria PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 400 private sector companies.
- The panel is stratified by detailed sector and company workforce size, based on contributions to GDP.
- The sectors covered by the survey include agriculture, mining, manufacturing, construction, wholesale, retail, and services. Data were first collected in January 2014.
