Nigeria’s private sector remained on a growth path in July, with businesses benefiting from stronger customer demand even as the pace of expansion slowed slightly. According to the latest Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) compiled by S&P Global, the headline PMI stood at 52.5 in July, down from 53.4 recorded in June. Although the figure marked the weakest reading in three months, it remained comfortably above the 50-point benchmark that separates economic expansion from contraction, extending the sector’s growth streak to six consecutive months. At the same time, purchase cost inflation eased to its lowest level in five months, offering businesses some relief from rising operating expenses.
The report revealed that stronger customer demand, competitive pricing strategies, and the launch of new products continued to fuel an increase in new business across the private sector. While business output expanded at a slower pace compared to previous months, agriculture and manufacturing recorded solid gains, with services and wholesale and retail sectors also posting moderate growth. Businesses responded by hiring more workers and increasing purchases of production materials to meet current demand and prepare for future orders. However, some companies faced logistical bottlenecks that delayed project completion, resulting in a slight rise in unfinished work despite improvements in supplier delivery times.
One of the report’s biggest highlights was the continued easing of inflationary pressures. Input costs and selling prices both increased at slower rates than in June, with purchase cost inflation recording the sharpest decline to reach its lowest level in five months. Even though businesses continued to grapple with higher fuel and raw material costs, the overall pace of cost increases softened significantly. Staff costs also rose at the slowest rate since April, allowing many firms to moderate price increases for customers. Among the sectors surveyed, agriculture experienced the strongest selling price growth, while services recorded the weakest inflation in output prices.
Commenting on the findings, Stanbic IBTC’s Head of Equity Research for West Africa, Muyiwa Oni, said stronger customer demand remained the key driver of private sector resilience during July. He noted that businesses successfully attracted more customers through better pricing strategies and product innovation while stepping up purchases of production inputs to support current operations and future workloads. Oni added that although fuel and raw material costs remained elevated, overall input cost inflation continued to ease, reflecting broader improvements in Nigeria’s inflation environment. He projected that headline inflation could decline further to around 15.72% in July after easing to 15.91% in June, while maintaining the bank’s 2026 GDP growth forecast of 4.1%.
Despite the encouraging signs, experts caution that significant challenges remain. Security concerns, exchange rate volatility, adverse weather conditions, rising fertiliser prices, and global economic uncertainty continue to pose risks to food production, investor confidence, and capital inflows. Nevertheless, business sentiment remains positive, with nearly half of surveyed firms expecting higher output over the next 12 months through expanded operations, increased marketing efforts, and the opening of new branches. If inflation continues to moderate and consumer demand remains resilient, Nigeria’s private sector could be well-positioned to sustain its recovery in the months ahead, offering renewed optimism for businesses and investors alike.
source: nairametrics
