Growth in Nigeria’s private sector strengthened in August, supported by rising customer demand and easing inflationary pressures, according to the latest Stanbic IBTC Bank Purchasing Managers’ Index (PMI) report.
The headline PMI climbed to 54.2 in August from 54.0 in July, marking the ninth consecutive month above the 50.0 mark that separates expansion from contraction. The report described this as the strongest improvement in business conditions since April, driven primarily by sharper increases in new orders and output.
“Business activity increased further in August and has remained above 50 points for the ninth consecutive month. The growth in activity was supported by stronger output and new orders,” said Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank.
Output growth reached a four-month high of 56.8 points, while new orders surged to a 19-month peak of 58.3 points, reflecting stronger customer demand and greater commitment to new projects. Three of the four sectors surveyed expanded, with manufacturing recording the only contraction.
Despite the positive momentum, job creation slowed slightly compared with July, although firms continued to expand staffing for a third consecutive month. Businesses also increased purchases of inputs at a slower yet significant pace, building inventories in anticipation of sustained growth.
Inflationary pressures showed signs of relief, with input costs rising at their weakest pace since March 2023. Output prices moderated for the fourth consecutive month, recording the slowest increase since April 2020.
“The continued moderation of input and output prices indicates that inflation is likely to remain subdued in the near term and could encourage the Central Bank of Nigeria’s Monetary Policy Committee to adopt an accommodative stance by September,” Oni explained.
Stanbic IBTC projects headline inflation may ease to between 21.45 percent and 21.63 percent in August, with a sharper moderation to as low as 17.19 percent by November. The bank also anticipates the CBN could cut interest rates by up to 150 basis points in 2025.
On the broader economy, the report noted that Nigeria’s rebased GDP grew by 3.13 percent year-on-year in Q1 2025, down from 3.76 percent in the previous quarter, its weakest pace since Q1 2024. Services remained dominant at 78.6 percent of GDP, agriculture fell to 0.5 percent from 19.7 percent in Q4 2024, while industry doubled its contribution to 20.9 percent, driven by structural gains from the Dangote Refinery.
“Overall, the Nigerian economy remains on track to expand by 3.5 percent year-on-year in 2025, up from 3.4 percent in 2024, supported by softer inflation, improved foreign exchange liquidity, and ongoing structural reforms,” Oni added.