Nigeria’s private sector growth accelerates in October

Investing.com -- Nigeria’s private sector showed improved growth momentum in October, with the headline Purchasing Managers’ Index (PMI) rising to 54.0 from 53.4 in September, according to data released by Stanbic IBTC Bank.

The October reading marks the 11th consecutive month of strengthening business conditions in Nigeria’s private sector, with output growth hitting a six-month high. Manufacturing led the expansion among the four broad sectors covered by the survey.

Companies reported that rising new orders and the introduction of new products positively impacted business activity. The softening of inflationary pressures also helped boost demand, with new orders increasing at a faster pace than in September.

While firms continued to raise selling prices in response to higher input costs, the latest increase in charges was the second-slowest in five-and-a-half years, faster only than August’s rise. Input cost inflation ticked higher in October, with faster increases in both purchase prices and staff costs, though the overall increase remained subdued compared to levels seen in 2023 and 2024.

The growth in new orders encouraged companies to hire additional staff for the fifth consecutive month, though the rate of job creation was only modest and slower than in September. Higher employment helped firms manage workloads, but power outages and payment delays from clients led to backlogs in some areas.

Both purchasing activity and stocks of inputs increased as companies responded to higher new orders and anticipated further expansion in the coming months. Supplier delivery times continued to improve.

Despite positive business activity, business confidence for the year ahead dropped for the fourth consecutive month in October, reaching its lowest level since May. About 46% of respondents predicted an increase in output over the next 12 months.

Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank, commented that headline inflation softened to 18.02% year-on-year in September, with further moderation expected in the coming months due to the ongoing harvest season keeping food prices low until December.

Oni projected that lower inflation, a stabilizing exchange rate, and anticipated further rate cuts should support improvement in real sector activity, with the Nigerian economy expected to grow by 4.0% in 2025.

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