Nigeria’s Private Sector Records Strongest Growth in 19 Months as Demand Surges and Inflation Eases

Nigeria’s private sector is showing signs of renewed strength, with activity expanding at its fastest pace in nearly two years.

According to the latest Purchasing Managers’ Index (PMI) survey for August 2025, business activity rose to 54.2 points from 54.0 in July, marking the ninth consecutive month of growth. A reading above 50 indicates expansion, and the figures highlight the most significant upturn in new orders in 19 months and the strongest output performance in four months.

The rebound was largely driven by stronger demand across key industries. Services, construction, and agriculture recorded notable gains, while manufacturing continued to lag behind. New orders climbed to 58.3 in August, reflecting a surge in consumer and business spending, while output grew to 56.8, the best rate seen since April.

Although companies continued to hire for the third month running, employment growth was slower than in July.

Many businesses focused on building inventories and clearing backlogs, which fell for the first time in five months.

Purchasing activity softened slightly, but firms generally reported improved business confidence.

One of the most encouraging trends was a slowdown in inflationary pressures. Input costs rose at their weakest pace since March 2023, while the rate of output price inflation dropped to its lowest level in more than five years.

Staff cost inflation also eased to a three-month low, offering relief to businesses grappling with high operating expenses.

Analysts at Stanbic IBTC expect the easing inflation trend to continue in the coming months. Headline inflation, which stood above 21 percent in July, is projected to decline further to between 17.2 and 17.9 percent by November. This could give the Central Bank of Nigeria room to cut interest rates by as much as 150 basis points in 2025, potentially stimulating additional growth in lending, investment, and consumer spending.

While optimism remains, some firms expressed caution due to lingering economic uncertainties. Nonetheless, the latest PMI data suggests that Nigeria’s private sector is regaining momentum, supported by robust demand, moderating price pressures, and the prospect of friendlier monetary policies.