Private Sector Growth Slows As PMI Falls To 53.4 In June

Business conditions in Nigeria’s private sector remained in expansion territory for the fifth consecutive month in June, although the pace of growth moderated, with the Purchasing Managers’ Index (PMI) declining to 53.4 from 54.1 in May.

The latest Stanbic IBTC PMI report showed that, while the headline index remained comfortably above the 50.0 threshold separating expansion from contraction, the lower reading reflected a slower pace of improvement in business activity at the end of the second quarter.

According to the report, stronger customer demand continued to drive increases in new orders and output, but growth eased compared with the previous month as manufacturers recorded a contraction. Despite this, firms expanded employment, purchasing activity and inventory holdings in response to rising workloads and expectations of sustained demand.

The report stated: “Improving demand conditions helped to support further increases in output and new orders in Nigeria’s private sector at the midway point of the year. Rising workloads and the prospect of further growth in the months ahead meant that firms took on additional staff and raised both purchasing activity and inventory holdings.”

It added that input costs and output prices continued to rise sharply, although inflationary pressures eased from the heightened levels experienced immediately after the outbreak of the Middle East conflict involving Israel, Iran and the United States.

Businesses also expressed stronger optimism about the outlook over the next 12 months, with confidence rising to its highest level since June 2025. Respondents attributed the improved sentiment to expansion plans, increased advertising efforts and the ability to build inventories ahead of anticipated demand.

Commenting on the report, Head of Equity Research West Africa at Stanbic IBTC Bank, Muyiwa Oni, said the slower PMI reading did not diminish the resilience of Nigeria’s private sector.

“Although the rate of growth slowed in June compared to May, Nigeria’s private sector witnessed an increase in output at the end of Q2 2026 as higher demand and new product development supported an increase in sales volume for companies,” Oni said.

He noted that stronger demand translated into higher workloads, prompting firms across three of the four sectors covered by the survey, excluding agriculture, to recruit additional staff.

According to him, business confidence climbed to a 12-month high as companies cited improved access to inventories, expansion strategies and marketing initiatives as reasons for expecting higher output over the coming year.

Oni added that while input prices remained elevated, the pace of increase was lower than during the onset of the Middle East conflict, reducing cost pressures on businesses.

He explained that rising costs of raw materials and transportation continued to be passed on to consumers through higher output prices.

The economist said the average PMI reading for the second quarter remained consistent with an estimated 3.94 per cent year-on-year growth in Nigeria’s Gross Domestic Product (GDP), slightly above the 3.89 per cent recorded in the first quarter.

He maintained Stanbic IBTC’s 2026 GDP growth forecast of 4.1 per cent, projecting oil sector growth of 3.45 per cent year-on-year and non-oil sector growth of 4.11 per cent.

However, Oni warned that insecurity across parts of the country, renewed exchange rate pressures, adverse weather conditions, rising fertiliser prices and global economic uncertainties could pose risks to Nigeria’s growth outlook in the months ahead.