Nigeria’s Business Activity Hits 7-Month Low Amid Reforms and Inflation Struggles

Business activity in Nigeria’s private sector weakened in June 2025, hitting its lowest level in seven months, according to Stanbic IBTC Bank’s latest Purchasing Managers’ Index (PMI) report. The PMI reading fell to 51.6 from 52.7 in May, signaling a slowdown in growth despite remaining above the 50.0 threshold that indicates economic expansion. Analysts interpret this as a sign that the country’s economic recovery remains fragile in the face of structural reforms and ongoing challenges.

The report attributes the slowdown to reduced output, softer demand, and weaker purchasing activity. Although inflationary pressures are beginning to ease, these factors have contributed to a more modest improvement in business conditions. Nigeria’s inflation rate fell for the second consecutive month to 22.97% in May, down from 23.71% in April, a development largely credited to ongoing government reforms targeting price stability and economic restructuring.

While inflation has started to cool—reaching a 25-month low—costs for businesses remain elevated. Companies are still grappling with high purchase prices, but the rate at which they are passing on these costs to consumers has slowed. Sectors such as food, healthcare, utilities, and clothing have seen some relief, yet the environment remains sensitive to price fluctuations, and many firms are exercising caution when adjusting pricing strategies.

Sector-specific data revealed that manufacturing experienced a contraction in production, dragging down overall business activity. The services and agriculture sectors posted only marginal gains. New business volumes hit a five-month low as companies reported weakened customer demand, although a few firms reported moderate success in acquiring new clients. Employment levels were largely unchanged, and the weakest inventory growth in seven months was recorded, underscoring cautious spending and operational challenges.

Despite these setbacks, business confidence rose to its highest point since August 2022. The optimism is driven by plans among firms to invest in infrastructure and scale up operations in anticipation of improved macroeconomic conditions. Nonetheless, the report highlights persistent operational hurdles including power shortages, delayed payments, and supply chain disruptions, which continue to hold back productivity.

Source: Business day