Nigeria’s private sector is experiencing its strongest period of growth in over a year and a half. The Stanbic IBTC Bank Purchasing Managers’ Index (PMI) reached a 19-month high of 54.2 in August, up from 54.0 in July. This positive trend, which has lasted for nine straight months, is driven by a surge in customer demand and a greater willingness among clients to start new projects.
The PMI reading, where any score above 50.0 indicates growth, shows that business conditions are steadily improving.
Key Highlights of the Report
- Sector Performance: Output increased in the services, construction, and agriculture sectors. Manufacturing was the only sector that did not show growth.
- Hiring: Companies continued to hire new staff for the third consecutive month to meet the rising demand.
- Operational Efficiency: Firms were able to clear their backlogs for the first time in five months, indicating better operational efficiency.
- Business Outlook: Despite the strong performance, business confidence declined slightly. However, companies remain cautiously optimistic, with plans to expand and increase marketing efforts in the future.
Inflation is Slowing Down
A key finding from the August report is the continued cooling of inflation. The rate of increase in input costs was the slowest since March 2023, while the rate of increase in prices for final goods and services was the lowest since April 2020. This suggests that inflation is likely to remain soft in the near term.
Muyiwa Oni, the Head of Equity Research at Stanbic IBTC Bank, said this trend might encourage the Central Bank of Nigeria to cut interest rates. The bank projects that headline inflation will continue to moderate and anticipates up to 150 basis points in cumulative rate cuts in 2025.
