Nigeria’s private sector showed resilience in August as businesses navigated softer inflation and shifting economic currents.
The latest Stanbic IBTC Bank Purchasing Managers’ Index (PMI) reveals that firms kept adapting and expanding, even while challenges persisted.
The PMI climbed to 54.2 in August, up from 54.0 in July, and extended a nine-month run of growth.
This increase marked the strongest improvement in business conditions since April.
Demand Drives Expansion
Customers placed new orders at a 19-month high, and companies responded by raising output to a four-month peak.
Services and industry surged ahead, while manufacturing trailed.
Head of Equity Research West Africa at Stanbic IBTC Bank, Muyiwa Oni, said: “Sharper rises in output and new orders lifted business activity in August, keeping it above 50 points for the ninth consecutive month.”
Even so, the pace of hiring slowed.
Yet firms still expanded their workforce for a third straight month.
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At the same time, businesses increased raw-material purchases to build inventories, although they did so cautiously to balance optimism with cost discipline.
Inflationary Pressures Ease
Input costs rose at their weakest rate since March 2023, and companies lowered output prices for the fourth straight month, registering the slowest increase since April 2020.
Consequently, analysts expect the Central Bank of Nigeria (CBN) to consider easing monetary policy as early as September.
Stanbic IBTC forecasts inflation will fall further, easing to about 21.5% in August and dropping closer to 17% by November.
Looking ahead, the bank expects the CBN to cut interest rates by as much as 150 basis points in 2025.
Mixed Signals In Wider Economy
Nigeria’s GDP grew 3.13% year-on-year in Q1 2025, down from 3.76% in the previous quarter and the weakest since Q1 2024.
Services dominated with a 78.6% share, while agriculture slumped to only 0.5%.
In contrast, industry doubled its contribution to 20.9%, boosted by structural shifts linked to the Dangote Refinery.
“Overall, the Nigerian economy remains on track to grow by 3.5% in 2025, up from 3.4% in 2024,” Oni added.
“Softer inflation, better FX liquidity, and structural reforms will drive this growth.”
