Nigeria's Private Sector Sees Output Rise in July, Inflation Eases

Nigeria's private sector experienced its sixth consecutive month of expansion in July, according to the Stanbic IBTC Bank Nigeria Purchasing Managers' Index (PMI). The headline PMI registered 52.5, a slight decrease from June's 53.4 but remaining above the 50.0 neutral mark. This indicates a continued strengthening in the health of the private sector, driven by improving demand conditions that supported business activity.

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Improving demand conditions supported a further increase in business activity, albeit one that was only modest and the slowest since January.

While overall business activity saw a modest increase, it was the slowest pace recorded since January. The agriculture and manufacturing sectors were standout performers, posting sharp rises in output. Growth was more moderate in the services and wholesale and retail sectors. Companies increased employment modestly in response to higher output requirements, although the pace of job creation eased to its weakest point since April.

The report highlighted a significant rise in new orders, alongside expansions in output and employment. Inflationary pressures softened during the month, with overall input costs increasing at their slowest rate in five months, though still at a sharp level. Purchase price inflation also eased considerably, reaching its weakest since February, with panellists citing higher costs for fuel and raw materials.

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The agriculture and manufacturing sectors posted sharp rises in output, with growth more modest in the services and wholesale and retail categories.

Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank, commented that Nigerian businesses benefited from improved customer demand in July. Better pricing strategies and new product launches also contributed to capturing new orders. These factors helped maintain private sector activity in expansionary territory, even as the pace moderated compared to June. Businesses also increased their input purchasing to meet current demand and prepare for future workloads.

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A modest increase in employment was also recorded in July as companies responded to higher output requirements.

Despite the overall positive trend, Oni noted that while input costs increased, the rate of increase moderated. The report suggests a resilient private sector navigating demand, production, and cost pressures, with agriculture and manufacturing leading the output growth.

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Nigerian businesses reported improved customer demand in July while better pricing and new product launches also helped them to capture new orders arising from the increase in demand.