Input cost inflation in Nigeria’s private sector eased to its weakest rate in almost five years in November, offering firms some respite after months of elevated pressures.
The latest Stanbic IBTC Bank Nigeria PMI report showed that although costs continued to rise, the pace of increase slowed noticeably as both purchase prices and staff costs recorded softer gains.
“Input costs increased at the slowest pace in almost five years, while output prices rose to the least extent since April 2020,” the report read.
This shift helped ease the pressure on output prices, which rose at the slowest rate since April 2020. The headline PMI stood at 53.6, slightly below October’s 54.0 but still signalling another solid improvement in business conditions.
Firms step up purchasing as sales improve across sectors
Firms reported stronger sales, new product launches, and better customer engagement, all of which supported output growth across the four major sectors covered by the survey.
New orders increased for the thirteenth straight month and at the fastest pace in three months, reflecting the combination of improving demand and waning inflationary pressures.
Businesses noted that the softer cost environment made it easier to manage operations, maintain output, and respond to customer needs.
The report highlighted that the broader trend of easing inflation had shaped activity through much of the year, and November’s results reinforced that direction.
The report showed that firms responded to rising sales by increasing their purchasing activity, which reached a seven-month high. This surge in buying contributed to a sharp rise in inventories, which expanded at the fastest rate since June 2023.
Companies said the decision to build stocks was driven by stronger demand and expectations of continued customer orders. Despite the increase in activity, employment growth was marginal and slower than earlier in the year, suggesting firms relied on existing staff capacity while prioritising input purchases.
Output growth eased slightly from October but remained strong, with agriculture, manufacturing, wholesale and retail, and services all recording expansions.
Businesses attributed the rise in output to stronger customer inflows and the launch of new products, which helped attract new orders. Backlogs of work rose for the first time in four months as firms experienced delays in customer payments.
However, supplier performance continued to improve, with delivery times shortening for the fifth straight month, helping companies manage production more efficiently. The combination of increased purchasing, shorter delivery times, and rising orders helped firms consolidate capacity, even as operational pressures persisted. These conditions shaped how businesses prepared for the final month of the year, balancing rising demand with lingering financial constraints.
Confidence weakens despite improving demand outlook
Business confidence softened further in November, dipping to its lowest level since May, despite firms maintaining expectations of higher output in the year ahead. The report indicated that while respondents remained optimistic about future production, broader uncertainties continued to weigh on sentiment.
Companies linked their optimism to planned investments and expansion initiatives, but the decline in confidence reflected caution as firms assessed the operating climate.
The rise in backlogs due to delayed customer payments added pressure to workflow and contributed to concerns about liquidity. At the same time, improved vendor performance supported operational stability, with suppliers delivering more quickly for the fifth straight month.
Commenting on the findings, Stanbic IBTC Bank’s Head of Equity Research West Africa, Muyiwa Oni, noted that easing inflation remained a key factor shaping business conditions.
He said input costs “eased to their slowest since December 2020” and that output price inflation slowed to its weakest level since April 2020. Oni also highlighted the rise in new orders to 56.9 points from 56.3 in October, showing sustained demand momentum across sectors.
