Nigeria’s private sector recorded stronger growth in August 2025 as improved customer demand and easing inflationary pressures boosted business activity, according to the latest Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI).
The report showed that the headline PMI rose to 54.2 in August, compared to 54.0 in July, signalling the ninth straight month of improvement in business conditions. The new figure also represents the strongest expansion since April, supported by faster growth in output and new orders, which reached their highest points in four and 19 months respectively.
Stanbic IBTC explained that the improvement was largely due to stronger customer demand and increased confidence from clients to embark on fresh projects. Output grew across three of the four sectors surveyed, while manufacturing was the only sector that recorded no growth.
The bank noted that while staffing levels expanded for the third month in a row, the pace of job creation was modest and lower than July’s rate. Despite this, many firms were able to reduce backlogs of work for the first time in five months, a sign that businesses are coping better with rising demand. Purchasing activity also rose as companies built up inventories in anticipation of future expansion, although the pace of increase was slower than in July.
The Head of Equity Research for West Africa at Stanbic IBTC Bank, Mr. Muyiwa Oni, said that the easing of inflationary pressures may influence monetary policy direction in the months ahead. According to him, “Input costs fell to their lowest level since March 2023, even though the increase is still higher than the long-term series average. In response, the rate of increase in output prices moderated for the fourth straight month in August and recorded the slowest pace since April 2020. This trend suggests inflation will remain soft in the near term, and it may encourage the Monetary Policy Committee of the Central Bank of Nigeria to move from its current neutral stance to a more accommodative monetary policy by September.”
Stanbic IBTC also projected that headline inflation would continue to ease. It estimated that inflation would moderate to between 21.45 per cent and 21.63 per cent year-on-year in August, with a further decline possible to between 17.19 per cent and 17.92 per cent by November. Based on this outlook, the bank said it expects cumulative interest rate cuts of up to 150 basis points in 2025.
The PMI report also provided insights into the wider Nigerian economy. It revealed that Nigeria’s rebased Gross Domestic Product grew by 3.13 per cent year-on-year in the first quarter of 2025. This represents the slowest pace of growth since the first quarter of 2024. The services sector remained the major driver of the economy, contributing 78.6 per cent. However, the agricultural sector suffered a sharp decline, dropping to just 0.5 per cent in the first quarter of 2025, compared to 19.7 per cent recorded in the previous quarter.
On the other hand, industries expanded by 20.9 per cent, buoyed largely by the performance of the Dangote Refinery and other industrial activities. Analysts say this reflects the gradual shift of economic momentum towards industrialisation, even though agriculture remains a critical part of Nigeria’s long-term growth strategy.
Despite the slowdown in GDP growth during the first quarter, Stanbic IBTC maintained that the Nigerian economy remains on course to achieve 3.5 per cent growth in 2025. This projection is slightly higher than the 3.4 per cent growth recorded in 2024. The bank said its optimism is based on expectations of easing inflation, improved foreign exchange liquidity, and structural reforms being introduced by the government.
The PMI report is widely regarded as a key measure of the health of the private sector in Nigeria. A reading above 50 indicates expansion, while a figure below 50 shows contraction. The August reading of 54.2 therefore suggests that businesses are gradually adjusting to economic reforms, rising investor confidence, and the relative stability in inflation trends.
Observers note that the performance of the private sector will remain crucial to Nigeria’s broader economic recovery. The ability of businesses to withstand inflationary pressures, expand production, and create jobs will determine how fast the country achieves sustainable growth.
As the Central Bank of Nigeria continues to monitor developments, attention will be on whether the monetary authority will lower interest rates later this year to support business activity. Such a move could further ease borrowing costs for firms and consumers, thereby stimulating investment and spending.
For now, the August PMI provides cautious optimism that Nigeria’s private sector is finding stability, even as challenges remain in sectors like manufacturing and agriculture.
