Nigeria’s private sector recorded its strongest growth in nine months in May, driven by a sharp increase in customer demand and new product launches, according to the latest Stanbic IBTC Bank Purchasing Managers’ Index (PMI).
The headline PMI rose to 54.1 in May from 52.4 in April, marking the fourth consecutive month of improvement in business conditions and the highest reading since August 2025. A PMI reading above 50 indicates an expansion in business activity.
The survey showed that both output and new orders expanded at accelerated rates during the month, reaching seven-month and nine-month highs respectively as firms reported stronger customer demand and the introduction of new products. Output growth was recorded across all major sectors of the economy covered by the survey.
With demand strengthening and firms anticipating further growth, businesses increased purchasing activity and built up inventories at a faster pace than in April. Improved supplier performance, supported by prompt payments, better logistics arrangements, and improved road conditions, also helped shorten delivery times.
Despite the positive momentum, employment growth remained modest. Companies continued to add workers, extending a year-long trend of job creation, but hiring remained subdued relative to the pace of expansion in output and orders. Backlogs of work also increased for a fourth consecutive month, partly due to customer payment delays, material shortages and power supply challenges.
Inflationary pressures persisted, although the pace eased. Rising fuel costs linked to the ongoing conflict in the Middle East continued to push up input costs and selling prices. However, purchase-cost inflation slowed to a three-month low, while output-price inflation eased to its weakest level since February.
Commenting on the report, Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank, said the improvement reflected stronger business activity across the private sector, supported by accelerating growth in output and new orders. He noted that while input prices remained elevated, the rate of increase had moderated for two consecutive months.
“The PMI data had implied economic growth of about 3.99 percent in the first quarter of 2026, slightly above the official 3.89 percent growth rate reported by the National Bureau of Statistics. According to him, the gap reflected weaker-than-expected performance in the non-oil sector.”
He identified agriculture, manufacturing, construction, information and communications technology, trade, and finance and insurance as the largest contributors to economic expansion during the quarter, accounting for more than 82 percent of real GDP growth.
Stanbic IBTC has consequently revised its 2026 economic growth forecast slightly downward to 4.13 percent from an earlier estimate of 4.22 percent. Nevertheless, the bank expects election-related spending, government investment drives, and increased infrastructure expenditure to support non-oil sector activity through the year.
The bank also maintained its projection that Nigeria’s crude oil production will average 1.7 million barrels per day in 2026, up from 1.64 million barrels per day in 2025, although it does not expect production to reach the 2 million barrels per day threshold before 2030.
While business confidence remained positive, sentiment weakened to its lowest level in a year as companies weighed persistent inflationary pressures and broader economic uncertainties against expansion plans, including branch openings, increased advertising, and the launch of new products.