Nigeria's private sector experienced its strongest growth in more than 4.5 years in September, according to the Stanbic IBTC Bank Nigeria Purchasing Managers' Index (PMI) report. The PMI rose to 56.4 points, the highest reading since February 2022, indicating a significant improvement in business activity. A PMI reading above 50 signifies better business performance than the previous month. The growth was driven by stronger customer demand and increased orders, which pushed businesses to produce more goods and services.
The September PMI figure shows that Nigerian businesses saw a substantial increase in new orders, marking the eighth consecutive month of growth and the strongest since February 2022. As a result, companies increased their output, with all four sectors covered by the survey recording growth. The increased demand also led to a rise in purchases of raw materials and other inputs needed for production, with the pace of purchasing being the fastest since February 2022.
The growth in business activity also led to an increase in inventories, with companies stocking up in anticipation of stronger demand in the months ahead. The report noted that the increase in inventories was the fastest since the end of 2021. Additionally, suppliers delivered goods faster for the third consecutive month, with companies attributing this to prompt payment to suppliers.
The improved business conditions also led to an increase in employment, with companies hiring more workers to cope with the surge in orders. However, the rate of job creation remained modest, with many new workers being employed temporarily to complete specific projects. Despite the growth in business activity, companies continued to face rising costs, including increased fuel, transportation, and raw material costs.
The rising costs were passed on to customers, with businesses increasing their selling prices. Over 24% of companies surveyed reported higher prices, with the rate of price increases reaching a three-month high in September. Muyiwa Oni, Head of Equity Research at Stanbic IBTC Bank, noted that the September performance showed a significant improvement in overall business conditions.
According to Oni, the strong performance in September indicates that business activity in the third quarter was better than in the second quarter. He estimated that Nigeria's economy could grow by 4.56% in the third quarter of 2026 and projected a full-year growth of about 4.4% in 2026, compared to 3.87% in 2025. The non-oil sector is expected to drive growth, with manufacturing, ICT, trade, real estate, finance, and insurance being key sectors.
Nigerian businesses are becoming more confident about their prospects over the next 12 months, with some planning to expand by opening new branches, attracting new customers, and increasing their stocks. The PMI survey, which covers companies in various sectors, is compiled by S&P Global from responses from about 400 private-sector companies and is endorsed by the National Bureau of Statistics.
Key points
- Nigeria's private sector recorded its strongest growth in over four years in September, driven by increased customer demand and orders.
- The growth in business activity led to an increase in employment, but the rate of job creation remained modest.
- Nigerian businesses are becoming more confident about their prospects, with some planning to expand in the next 12 months.
