Business activity in Nigeria’s private sector strengthened in October, marking the highest output growth in six months, even as power outages and delayed client payments posed operational setbacks.
According to the latest Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) report, compiled by S&P Global, the headline index rose to 54.0 points in October from 53.4 in September, signalling a further improvement in operating conditions.
The PMI has now remained above the 50.0 threshold for 11 consecutive months, showing sustained expansion across key sectors, including manufacturing, agriculture, construction, and services.
The rise in output reflected a sharper increase in new orders, supported by product diversification and stronger customer demand. Manufacturing posted the fastest growth among the four broad sectors covered, with firms citing the introduction of new products as a key driver of sales.
Although companies continued to raise their selling prices in response to rising input and wage costs, the pace of price inflation was muted compared with previous years. The report noted that output charges rose at the second-slowest rate since April 2020, suggesting easing inflationary pressures within the private sector.
Meanwhile, input cost inflation ticked up slightly in October, largely driven by higher purchase and staff costs, though it remained weaker than the levels seen in 2023 and 2024.
Operational disruptions, modest job gains, and softer confidence
Firms expanded employment for the fifth consecutive month to cope with increased demand, though the pace of hiring slowed relative to September.
- The modest job creation, combined with rising workloads, was offset by recurring electricity shortages and delayed customer payments that led to a build-up of uncompleted orders. While higher staffing helped some firms manage workloads efficiently, others faced productivity constraints as frequent power outages forced temporary halts in operations.
- Despite operational challenges, both purchasing activity and inventories of inputs rose in October as firms prepared for future expansion. Suppliers’ delivery times also shortened, reflecting improving supply chain efficiency.
However, business confidence slipped for the fourth straight month and hit its lowest level since May, even though nearly half of respondents still expected output to rise in the next 12 months. Companies said their optimism was supported by marketing initiatives and export prospects but tempered by uncertainty around energy costs, inflation, and policy stability.
Price stability, harvest season to support real sector growth
Commenting on the survey, Muyiwa Oni, Head of Equity Research for West Africa at Stanbic IBTC Bank, said business activity began the final quarter of 2025 on a strong note. He attributed the improvement to higher output and new orders, aided by moderating inflation and stable exchange rates.
- Oni projected headline inflation to ease to between 15.8% and 16.2% in October and further to around 14.3% to 14.6% in November, as food prices continue to decline during the main harvest season.
- He noted that while supply disruptions and production glitches at the Dangote Refinery have kept fuel prices elevated, the relative appreciation of the naira should offer some relief to non-food inflation.
- Oni added that lower inflation, a stable exchange rate, and the likelihood of rate cuts would support real sector growth in the medium term. Based on year-to-date trends from PMI data, he forecast Nigeria’s economy to expand by around 4.0% in 2025, driven mainly by the manufacturing and services sectors.
The PMI survey, endorsed by the National Bureau of Statistics and compiled from responses of about 400 companies across agriculture, mining, manufacturing, construction, wholesale, retail, and services, provides an early indicator of private sector performance. October’s results showed that, despite infrastructural inefficiencies and cash flow disruptions, Nigeria’s businesses continued to show resilience and adaptability.