Nigeria's private sector has experienced its strongest growth in over four years, according to the Stanbic IBTC Bank Nigeria Purchasing Managers' Index (PMI). The index increased to 56.4 in September from 54.3 in August, signalling the most pronounced improvement in business conditions since February 2022. This growth is attributed to a sharp rise in new orders and business activity. Readings above 50.0 indicate expansion, while below 50.0 shows deterioration.
The latest PMI figure points to a marked and broad-based improvement across the private sector. A key driver of this growth was firms' success in securing new orders, supported by improving customer demand and the launch of new products. New business rose for the eighth consecutive month, at the strongest pace since February 2022, while output also increased at the sharpest rate since that month. This growth was widespread, with marked expansions across all four monitored sectors.
With workloads rising, companies ramped up purchasing activity markedly in September, in some cases buying inputs in anticipation of further demand improvement. This led to the greatest accumulation of inventories since the end of 2021. Vendor performance also improved for the third month running, aided by prompt payments to suppliers. Companies are preparing for potential future demand by stockpiling inputs.
On employment, companies hired additional staff but the rate of job creation remained modest, with many hires on a temporary basis to complete specific projects. The expansion in capacity, however, helped firms keep on top of workloads, with backlogs decreasing for the second month running, albeit marginally. This indicates that businesses are adjusting their workforce to meet current demands.
According to Muyiwa Oni, head of Equity Research West Africa at Stanbic IBTC Bank, overall business conditions improved significantly in September, with the headline PMI rising to a level not seen since February 2022. This ensured a better third quarter for business activities relative to the second quarter of the year. All four sectors monitored recorded significant improvement as firms noted improving customer demands and introduced new products.
Despite the strong output, inflationary pressures were marked. A further sharp rise in purchase prices was recorded, with the rate at a three-month high, driven by higher fuel costs, animal feed, foodstuffs and other raw materials. Staff cost inflation also quickened. This could potentially impact businesses' profitability and sustainability in the long term.
Companies were, however, more optimistic about the 12-month outlook, citing business expansion plans, including opening new branches, intentions to begin exporting, securing new customers and stock building. This optimism suggests that businesses expect growth to continue in the near future, driven by their strategic plans and improving market conditions.
Key points
- Nigeria's private sector recorded its strongest growth in over four years in September 2026.
- The Stanbic IBTC Bank Nigeria Purchasing Managers' Index (PMI) increased to 56.4 in September from 54.3 in August.
- Businesses expect growth to continue in the near future, driven by their strategic plans and improving market conditions.
