Onome Amuge
Nigeria’s private sector expanded at a faster pace in August, buoyed by stronger customer demand and easing inflation, according to a closely watched business survey that suggests the economy is on course for steady growth this year.
The Stanbic IBTC Bank Purchasing Managers’ Index (PMI) rose to 54.2 in August, up from 54.0 in July, remaining above the 50-point threshold that separates growth from contraction for the ninth consecutive month. The reading marks the strongest improvement in operating conditions since April, driven by sharper increases in output and new orders.
“The rise in the headline index primarily reflected sharper expansions in output and new orders, with rates of growth hitting four- and 19-month highs, respectively. Panellists reported stronger customer demand and a greater client willingness to commit to new projects,” the PMI report said.
The August data indicated that activity rose across three of the four sectors tracked by the survey, with manufacturing the only laggard. Companies cited improved demand conditions, new branch openings, and marketing campaigns as key drivers of growth.
While staffing levels increased for the third month in a row, job creation was modest and weaker than in July. However, the rise in new orders helped firms reduce backlogs of work for the first time in five months, suggesting businesses are keeping pace with demand.
Purchasing activity slowed slightly, but remained firmly expansionary as companies accumulated inventories in anticipation of future sales.
The survey also pointed to a moderation in inflationary pressures, offering relief to businesses after more than two years of high cost growth linked to currency weakness, rising fuel prices and supply chain disruptions. Input cost inflation in August fell to its lowest level since March 2023, while output price growth eased for a fourth consecutive month, reaching its slowest pace since April 2020.
“Elsewhere, input cost eased to its lowest level since March 2023, even as the latest increase is still above the series average. In line with this, the growth in output prices moderated for the fourth consecutive month in August,” said Muyiwa Oni, head of equity research for West Africa at Stanbic IBTC Bank.
“The continued moderation of input and output prices still suggests that inflation is likely to remain soft in the near term, and may incentivise the MPC of the CBN to switch to an accommodative monetary policy by September from the current neutral stance,” he added.
Headline inflation, which stood at 21.8 per cent in July, is expected to ease further. Stanbic IBTC forecasts a slowdown to about 21.45 per cent year-on-year in August, with inflation possibly falling to 17–18 per cent by November.
That trajectory could encourage the Central Bank of Nigeria (CBN) to begin easing policy after months of holding its benchmark rate at 27.5 per cent, following an aggressive tightening cycle in 2024. Analysts at Stanbic IBTC expect up to 150 basis points in cumulative rate cuts in 2025.
For businesses, lower borrowing costs could help sustain the momentum in new projects and investment. “Given these higher new orders, firms expanded their staffing levels for the third consecutive month. The opening of new branches and marketing plans is also supporting firms’ optimism that output will increase over the coming year,” Oni added.
Despite lingering challenges, including high unemployment, persistent insecurity in key regions and currency volatility , the PMI data noted that the private sector is underpinning Nigeria’s fragile recovery.
Stanbic IBTC projects GDP growth of 3.5 per cent in 2025, slightly above the 3.4 per cent expansion estimated for 2024. Softer inflation, improved foreign exchange liquidity, and ongoing structural reforms are expected to support the outlook.
“Overall, the Nigerian economy is still on track to grow. The moderation in inflation and stronger demand conditions are encouraging signs that business confidence is gradually returning,” Oni said.
