Nigerian private sector business recorded a four-and 19-month high in output and new orders, respectively, in August, but the manufacturing sector remained subdued.
The sector is among the four broad sectors, including agriculture, construction, and services, that Stanbic IBTC Bank tracks in its monthly Purchasing Managers Index (PMI) report.
The latest report, released on Monday, September 1, shows that business activity continued to gain traction, but the manufacturing sector waned as customer demand improved and inflationary pressures softened.
PMI, used to measure the health and direction of the manufacturing and services sectors’ businesses, is a key economic indicator that provides insights into business activity, including new orders, production, inventory (raw materials and finished goods), and employment.
In the month under review, the headline PMI rose consecutively for the second month to 54.2 points in August from 54.0 points in July.
It has dropped consecutively in the three months before July, but maintained a lower expansion mode, Pinnacle Daily can report.
According to the Stanbic IBTC report, a PMI reading below 50.0 points signals a contraction in business activity, while a reading above that shows a growth or expansion in business activity.
“At 54.2 in August, the headline PMI was above the 50.0 no-change mark for the ninth month running, signalling a sustained improvement in the health of the Nigerian private
sector.
READ ALSO: MAN Kicks against Reintroduction of 4% Import Charge
“The rise in the headline index primarily reflected sharper expansions in output and new orders, with rates of growth hitting four- and 19-month highs respectively. Panellists reported stronger customer demand and a greater willingness among clients to commit to new projects,” the report stated.
Pinnacle Daily reports that Nigeria’s inflationary pressures eased to a four-month low of 21.88 per cent in July 2025, the lowest level since January 2023.
The latest Foreign Trade in Goods Statistics, released by the National Bureau of Statistics (NBS), revealed that manufactured goods accounted for N7.81 trillion in the first quarter of this year, representing 21.67 per cent of total trade.
However, manufacturing exports declined sharply by 40.43 per cent from N494.22 billion in the fourth quarter of 2024 to N294.43 billion in the first quarter of 2025.
This reflects deep-rooted challenges stifling real growth in the manufacturing sector.
The Director-General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, has been critical about the sector’s performance, blaming it largely on the government’s harsh policies that are fuelling borrowing and energy costs.
He had lamented over the benchmark interest rate currently standing at 27.5 per cent, which is said to be extremely high for manufacturers.
READ ALSO: Why Nigeria Will Record 3.4% GDP Growth, Lower Rates In 2025 – PwC
He said, “MAN had urged regulators to update their policies to ensure fair protection for manufacturers while safeguarding consumer interests.”
Commenting on the PMI report, the Head of Equity Research West Africa at Stanbic IBTC Bank, Muyiwa Oni, explained that the increase in business activity was driven by sharper increases in output and new orders.
“Notably, output (56.8 points vs July: 56.1 points) increased in line with customers’ willingness to commit to new projects, while the growth in new orders (58.3 points vs July: 57.3 points) quickened to a 19-month high amid reports of increasing customer demand.
“Given these higher new orders, firms expanded their staffing levels for the third consecutive month. The opening of new branches and marketing plans are also supporting firms’ optimism that output will increase over the coming year,” Oni said.
He further pointed out that input cost eased to its lowest level since March 2023, even as the latest increase is still above the series average.
In line with this, the rate of increase in output prices moderated for the fourth consecutive month in August at the slowest rate since April 2020.
Oni believes that the continued moderation of input and output prices still suggests that inflation is likely to remain soft in the near term, and may incentivise the monetary policy committee (MPC) of the Central Bank of Nigeria (CBN) to switch to an accommodative monetary policy when it holds its two-day meeting in September from the current neutral stance.
“Indeed, we estimate headline inflation to moderate further in August to 21.45% y/y – 21.63% y/y, and possibly settle at 17.19% y/y – 17.92% y/y by November. Accordingly, we still expect up to 150 bps cumulative rate cut in 2025,” he projected.
He anticipates that with the rebased gross domestic product (GDP) at 3.13 per cent in the first quarter of the year, slower than the 3.76 per cent in fourth quarter of 2024, amid the structural shift introduced into the industries sector by the operations of the Dangote Refinery, that overall, the Nigerian economy is on track to grow by 3.5 per cent in 2025 from 3.4 per cent growth seen in 2024.
This will be supported by softer inflation, improvement in foreign exchange liquidity conditions, and structural reforms,” Oni added.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
