Nigeria’s Private Sector Grows for Sixth Straight Month Despite Inflation and Employment Challenges
Nigeria’s private sector sustained its growth momentum in May 2025, marking the sixth consecutive month of expansion, according to the latest Stanbic IBTC Purchasing Managers’ Index (PMI). The index posted a score of 52.7, indicating continued economic growth, although the rate of improvement slowed compared to April’s 54.2. This moderation, the weakest since January, reflects reduced output and new order growth, despite positive signs such as increased customer demand and successful new product launches.
All four key sectors—wholesale, retail, services, and manufacturing—reported output growth, with wholesale, retail, and manufacturing showing the sharpest gains. Muyiwa Oni of Stanbic IBTC noted that although the business environment remains expansionary, the slowdown signals softer market conditions. He highlighted the consistent rise in new orders since November 2024 but acknowledged that the momentum of this growth eased in May.
One of the major concerns for businesses remains inflation. Companies faced rising purchase costs driven by expensive raw materials, currency depreciation, and transport costs. Although the rate of input price increases slightly eased compared to April, it stayed well above the historical average. Businesses responded by maintaining high output prices, although some reduced prices to retain or attract customers, leading to the lowest rate of output price inflation in two years.
Employment figures showed a setback, with the first decline in six months. Many firms cited difficulties in meeting payroll obligations, resulting in resignations and understaffing. These workforce challenges, combined with delayed customer payments, disrupted operations and led to the sharpest increase in backlogs since February 2023. Despite these issues, businesses ramped up purchasing to meet anticipated demand, reflected in increased inventory levels and improved supplier delivery times.
Overall business confidence, however, weakened further in May, hitting one of its lowest levels on record. Still, optimism persisted among firms expecting output growth in the coming year, driven by expansion plans and marketing efforts. Oni concluded that while Q2 may see weaker growth than Q1 due to inflationary pressures, he expects Nigeria’s economy to grow by 3.5% in 2025, slightly higher than 2024’s 3.4% real growth rate.
Source: Punch