Nigeria’s Private Sector Hits 9-month High as PMI Climbs to 54.1

Nigeria’s private sector recorded its strongest expansion in nine months in May 2026, as improving demand conditions, rising new orders, and stronger output growth pushed the headline Purchasing Managers’ Index (PMI) to 54.1, signalling sustained recovery momentum in Africa’s largest economy.

The latest PMI report compiled by Stanbic IBTC Bank in partnership with S&P Global showed that business conditions strengthened for the fourth consecutive month, with the index rising from 52.4 in April to 54.1 in May.

The reading marks the most pronounced improvement in private sector activity since August 2025 and indicates a solid monthly expansion in operating conditions across manufacturing, agriculture, services and construction.

According to the survey, the acceleration was driven primarily by sharper increases in output and new orders, as firms responded to improving customer demand and the introduction of new products across key sectors.

The report showed that output growth reached a seven-month high, while new order inflows hit a nine-month peak, underscoring strengthening underlying demand in the economy despite persistent inflationary pressures.

Businesses responded by increasing purchasing activity and rebuilding inventories, with input procurement rising at its fastest pace in several months as firms sought to meet expected future demand.

Improved supplier performance also supported activity, with faster deliveries attributed to prompt payments, better logistics coordination and improved road conditions in some regions.

However, employment growth remained muted, despite sustained job creation for over a year, indicating that firms continue to rely on productivity gains and operational efficiency rather than large-scale hiring.

Work backlogs also increased for the fourth consecutive month, driven by customer payment delays, input shortages and intermittent power supply challenges.

On the cost side, the report highlighted persistent inflationary pressures, with higher fuel costs—linked to global energy market disruptions- continuing to drive up input prices in May.

Although purchase price inflation remained elevated, the pace of increase slowed for the second consecutive month, reflecting early signs of easing cost pressures in the supply chain.

Output prices also rose sharply, particularly in manufacturing and agriculture, although the rate of inflation moderated to its lowest level since February 2026.

Stanbic IBTC Head of Equity Research for West Africa, Muyiwa Oni, said the data reflects a strengthening but still uneven recovery in business activity.

He noted that improving demand conditions and increased product launches were key drivers of the expansion, even as inflationary pressures continue to weigh on operating costs.

The PMI report also aligns with recent official data showing that Nigeria’s economy grew by 3.89 per cent year-on-year in Q1 2026, supported largely by non-oil sector resilience.

Oni observed that the oil sector expanded modestly by 2.57 per cent, while non-oil growth slowed slightly to 3.94 per cent from 3.99 per cent in the previous quarter.

He added that agriculture, manufacturing, construction, information and communication, trade, and finance & insurance remained the primary drivers of growth, collectively accounting for 82.4 per cent of real GDP expansion in the quarter.

Based on current momentum, the bank revised its full-year growth forecast slightly to 4.13 per cent for 2026, down from an earlier projection of 4.22 per cent, while 2025 growth is estimated at 3.87 per cent.