At the start of the third quarter of 2025, Nigeria’s private sector found renewed strength, as reflected in the latest Stanbic IBTC Bank Purchasing Managers’ Index PMI. July’s PMI reading rose to 54.0, the highest in three months, indicating a strong improvement in business conditions and continuing an eight-month growth streak.
The PMI, a reliable measure of private sector performance, showed a notable uptick in activity across several industries. The increase from June’s 51.6 reading signals rising confidence among businesses and consumers. Readings above 50.0 point to expansion, while those below suggest contraction.
Employment Climbs as New Orders Boost Demand
A standout from the July data is the spike in job creation. Companies hired at the fastest pace since October 2023. This was driven by a sharp rise in new orders and a need to accelerate project delivery. The hiring trend not only meets current demands but also reflects optimism about future business growth.
Many firms reported that customer demand had improved. Some pointed to easing inflation as a factor, while others credited new product launches for the increase in sales. With more hands on deck, businesses were able to keep work backlogs steady, halting the rise seen in the past three months.
Rise in Purchasing and Inventory Levels
With demand climbing, companies increased their purchases of raw materials and other inputs. This led to a strong buildup of inventory. Shorter supplier delivery times also supported this increase, allowing firms to stock up efficiently.
Input Costs Easing, But Wage Pressures Grow
Inflation, though still present, appears to be cooling. The rate of input price increases slowed for the third straight month, reaching its lowest level since April 2020. However, firms continued to face sharp rises in the cost of materials, often tied to exchange rate fluctuations and global supply issues.
Staff-related costs moved in the opposite direction. Wages rose at the fastest rate in five months. Companies cited two main reasons: an increase in hiring and a need to help employees manage higher living expenses, especially in transport.
Despite the increase in wages, overall output price inflation eased to its slowest rate since May 2023. Some firms took this opportunity to offer discounts, aiming to attract more business by passing on cost savings.
Outlook Still Positive Despite Slight Dip in Confidence
While optimism remains high among Nigerian firms, it has softened slightly from the peak recorded in June. Many businesses still expect growth in the coming year. Those with an upbeat outlook linked their expectations to plans for capital investment and increased marketing efforts.
The July 2025 PMI update offers a glimpse of a resilient and adaptive Nigerian economy. From increased hiring to a pick-up in customer demand, businesses are taking proactive steps to stay competitive. Easing inflation and improved supply chains are providing further relief, while companies continue to invest in their teams and operations. While challenges remain, Nigeria’s private sector is proving it has the agility and determination to thrive.
