By Ayomide otitoju
Nigeria’s private sector sustained growth into the midway point of the second quarter of 2025, although signs of a slowdown emerged as inflationary pressures persisted, according to the latest Stanbic IBTC Bank Purchasing Managers’ Index™ (PMI®) report.
The headline PMI fell to 52.7 in May from 54.2 in April, remaining above the 50.0 threshold that separates growth from contraction for the sixth consecutive month. However, the latest figure marks the weakest improvement in business conditions since January.
“Business conditions remain in expansionary territory amid ongoing customer demand and new product launches,” said Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank. “However, the pace of improvement moderated, with the softest uptick in new orders in four months, suggesting market conditions are beginning to ease.”
Growth in both output and new orders slowed in May, although respondents cited improved client demand, rising customer numbers, and product innovation as key drivers of activity. The most robust output growth was recorded in the wholesale & retail and manufacturing sectors.
Despite elevated inflation, cost pressures eased slightly compared to April. Firms continued to face significant increases in input costs, driven by higher raw material prices, currency weakness, and rising transport expenses. As a result, output charges remained elevated, although the rate of output price inflation dropped to a two-year low, partly due to discounting strategies by some firms to retain customers.
Employment levels, however, fell for the first time in six months, with firms citing challenges in meeting payroll obligations and subsequent staff resignations. The staff shortages contributed to a backlog of work, which rose for the second consecutive month and at the sharpest pace since February 2023. Delayed customer payments were also flagged as a key constraint on project completion.
In contrast to the employment trend, purchasing activity expanded at a solid pace, reflecting firms’ efforts to meet current and anticipated demand. Stocks of purchases rose at the fastest rate in three months, while vendor delivery times continued to shorten—though to a lesser extent than earlier in the year—thanks to competitive supplier behavior and prompt payments.
Business sentiment weakened for the fourth consecutive month and hovered near record lows. Nonetheless, firms remained generally optimistic about future output, underpinned by expectations for business expansion, marketing efforts, and inventory restocking.
Looking ahead, Oni noted that despite the headwinds, Nigeria’s business environment is poised to end Q2 2025 with positive momentum, albeit weaker than in the first quarter.
“With inflation expected to ease relative to the 2024 average and interest rates likely to decline, we maintain our growth forecast of 3.5% year-on-year in 2025, slightly above the 3.4% recorded in 2024,” he added.
