Stanbic IBTC Bank Nigeria PMI®: New order growth hits one-year high in August

Stanbic IBTC Bank Nigeria PMI®: New order growth hits one-year high in August

Nigerian companies increased business activity at a much faster pace in August amid greater success in securing new orders. In turn, purchasing and employment also rose, although the pace of job creation was only muted. Meanwhile, inflationary pressures ticked higher.

The headline figure derived from the survey is the Stanbic IBTC Purchasing Managers' Index™™ (PMI). Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.

The headline PMI rose to 54.3 in August, up from 52.5 in July and signalling a solid monthly strengthening in the health of the Nigerian private sector. Moreover, the latest improvement was the joint-largest in just over two-and-a-half years, equal with that seen in March 2025. Business conditions have now strengthened in seven successive months.

New orders rose substantially midway through the third quarter of the year, and at a pace unsurpassed since the start of 2024. Panellists reported that customer demand had improved, while the launch of new products had also contributed to growth.

Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank commented: "Private sector activity in Nigeria was in an expansionary territory for the seventh consecutive month, rising to 54.3 points in August from 52.5 points recorded in July. Asides improved demand and the launch of new products which have been common factors in the past few months, companies reported availability of materials as a factor that supported overall growth in August, with output now rising above the 50.0 points expansionary threshold for the 21st consecutive month. Companies also remain positive on future output as they plan to hire more workers, export to other countries and expand into new locations amid an expectation of higher customer numbers.

Meanwhile, input prices maintained an uptrend on account of higher transportation costs and increase in prices of raw materials. In line with this, output prices also maintained an uptrend, with the agricultural sector seeing the biggest jump in prices. Indeed, food prices (20.31% y/y as of July from 17.52% y/y in June) have maintained an uptrend for the sixth consecutive month despite headline inflation moderating for the second consecutive month to 15.43% y/y in July (vs June: 15.91% y/y).

The PMI prints so far in Q3:26 continue to reinforce a strong growth outcome for the quarter, likely to help sustain a 4.1% GDP growth rate for the full year 2026. While the oil sector's growth is likely to slow to 3.45% y/y in 2026 (vs 2025: 8.50% y/y), we expect a better performance from the non-oil sector which may grow by 4.11% y/y (vs 2025: 3.71% y/y). Among the three broad sectors of the economy, we expect the manufacturing sector to see the biggest boost to its growth amid the low statistical base effects from 2025 while ICT, trade, real estate, and finance & insurance will likely remain the biggest drivers of the services sector's growth."

In response to sharply rising new orders, companies ramped up their business activity in August, with the rate of expansion much faster than seen in July. Some panellists also linked growth to better material availability. Output has now risen in each of the past 21 months. Underlying data pointed to increases in activity across all four broad sectors, with particularly strong growth in the agriculture and manufacturing industries.

Employment continued to rise, the fifteenth month running in which job creation has been recorded. That said, in contrast to the sharp expansions in output and new orders, the rate of jobs growth remained modest. Wholesale & retail employment even decreased, while rising staffing levels were registered elsewhere.

Despite the muted pace of job creation, companies were better able to keep on top of workloads in August, recording a fall in backlogs of work for the first time in seven months.

Improving customer demand and preparation for upcoming projects led companies in Nigeria to expand their purchasing activity in August, and at a strong pace that was the fastest since last November. In turn, the rate of inventory building also hit a nine-month high.

Suppliers' delivery times shortened for the second month running, and to a greater extent than in July. Prompt payments and good relationships with suppliers were among the factors helping to speed up deliveries, according to respondents, with competition among vendors and improved logistics also behind shorter lead times.

The rate of purchase cost inflation ticked up in August but was still below the average over the year-to-date. Higher fuel and transportation costs were widely reported, with companies also indicating that raw material prices had risen during the month. Meanwhile, the rate of staff cost inflation eased to the weakest in nine months.

In line with the picture for purchase costs, the pace of output price inflation quickened in August as companies passed higher expenses on to customers. Agriculture recorded the fastest increase in charges of the four monitored sectors.

Looking to the future, companies remained optimistic that output will rise over the coming year, although sentiment dipped to a three-month low. Anecdotal evidence suggested that positive sentiment reflected a range of factors, including plans to expand into new locations, export to other economies and raise employment. Expected improvements in customer numbers also supported optimism.