Nigeria’s Private Sector Output Growth Hits 2022 High – PMI
Nigeria’s private sector output growth hits the highest seen since 2022, S&P Global said in its latest Purchasing Managers’ Index (PMI) report for Stanbic IBTC.
The PMI report said September data signalled strengthening growth momentum in Nigeria’s private sector, as a rapid rise in new orders spurred the fastest increase in business activity since February 2022.
As workloads rose, companies ramped up purchasing and hired extra staff, although employment rose only modestly, S&P Global wrote in the report.
Meanwhile, inflationary pressures were also marked, with companies increasing their selling prices at the fastest pace in three months in response to higher input costs.
The headline PMI increased for the second month running in September to 56.4, from 54.3 in August. The latest reading signalled a marked improvement in private-sector health, the most pronounced in just over four and a half years.
A key factor behind the improvement in overall business conditions was firms’ success in securing new orders in September.
The report said improving customer demand and new product launches drove the eighth consecutive monthly rise in new business, the strongest since February 2022.
Business activity also rose at the sharpest pace since then. The latest rise in output was widespread across the economy. Indeed, sector data showed marked expansion across all four monitored categories.
To keep up with workloads amid sharply rising new orders, companies markedly expanded purchasing activity in September. In some cases, companies bought inputs in anticipation of further demand improvements in the months ahead, the report stated.
Higher input buying fed through to a marked inventory build, the largest since the end of 2021. Prompt payments to suppliers reportedly ensured timely delivery, and vendor performance improved for the third month running.
Companies also hired additional staff in September, but job creation was only modest. Moreover, companies often hired new workers only temporarily to complete specific projects.
Nonetheless, capacity expansion during the month helped firms keep up with workloads despite the rapid rise in new orders. Backlogs of work decreased for the second month running, albeit only marginally. Purchase prices rose sharply again at the end of the third quarter, with inflation at a three-month high.
Respondents said higher fuel costs often drove the latest increase, and they also reported rising prices for animal feed, foodstuffs, and other raw materials. Staff cost inflation also quickened as companies helped workers cope with higher living costs and offered incentives to complete projects on time.
Firms subsequently passed higher input costs through to customers, and selling prices rose rapidly as a result. In line with the trends in purchase prices and staff costs, the latest rise in output prices was the fastest since June.
Companies were more optimistic regarding the 12-month outlook for business activity in September. Positive sentiment often reflected business expansion plans, including opening new branches and starting to export products.
Commenting, Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank, said: “Overall business conditions improved significantly in September, with the headline PMI (56.4 points vs August: 54.3 points) rising to a level not seen since February 2022 (57.3 points), thereby ensuring a better third quarter for business activities relative to the second quarter of the year.
Indeed, all four sectors monitored by the survey recorded significant improvement in September, as firms noted improving customer demand, secured new orders during the period, and introduced new products to the market.
As a result, companies also increased the pace of hiring, although most of these workers were hired temporarily to complete specific tasks.
Elsewhere, higher fuel prices continue to drive up transport costs. This, along with higher raw material prices, rising staff costs, and higher prices for other food products, helped keep input costs on an upward trend.
This then fed into output prices, which rose to a three-month high in September. The strong end to the quarter implies that the PMI prints in Q3:26 are consistent with likely 4.56% y/y GDP growth in Q3:26, taking the full-year 2026 growth estimate to about 4.4% y/y from 3.87% y/y in 2025.
The non-oil sector is expected to perform better in 2026 than in 2025, as more sectors contribute to improved GDP growth this year.
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.” Nigeria’s US Dollar Bonds Dumped as 10-Year Yield Surges to 8%
