Private sector growth in Nigeria strengthened to its highest level in nine months during May 2026, driven by sharp increases in output and new orders. The positive performance came as businesses continued to grapple with rising fuel costs that kept inflationary pressures elevated, according to the latest Stanbic IBTC Bank Nigeria Purchasing Managers' Index (PMI).
The PMI rose to 54.1 in May from 52.4 in April, signaling a greater improvement in business conditions and marking the fourth consecutive month of growth in the health of the private sector. The reading was the most pronounced since August 2025.
Key Drivers of Growth
According to the report, the improvement was largely driven by faster expansions in output and new orders, which recorded seven-month and nine-month highs, respectively. Businesses attributed the rise in activity to stronger customer demand and the introduction of new products. Output increased across all four broad sectors covered by the survey.
Rising demand and expectations of further growth encouraged firms to increase purchasing activities and build inventories. The pace of expansion in both areas accelerated from April, while improved supplier performance helped firms to secure inputs more quickly. Companies cited prompt payments, better arrangements with suppliers, and improved road conditions as factors that expanded deliveries.
Employment and Backlogs
Despite the stronger business environment, job creation remained subdued. Employment increased only slightly in May, although firms have expanded staffing levels every month for the past year. Additional hiring was mainly linked to heavier workloads. Outstanding workloads increased for the fourth consecutive month, with firms blaming delayed customer payments, materials shortages, and persistent power failures.
Inflationary Pressures
Despite the positive outlook, inflationary pressures remained significant. The report showed that higher fuel costs, following the outbreak of war in the Middle East, continued to drive up purchase prices in May. Although input cost inflation eased to a three-month low, purchase costs rose sharply. Purchase prices increased much faster than staff costs, which rose modestly as some companies raised wages to help employees cope with higher living and transportation expenses. Output prices also increased sharply, although the pace of inflation eased to its lowest level since February.
Expert Commentary
Commenting on the survey, Head of Equity Research West Africa at Stanbic IBTC Bank, Muyiwa Oni, said: “Private sector activity in Nigeria improved to its best level in nine months, with the headline PMI rising to an impressive 54.1 points in May from 52.4 points in April.” He noted that this impressive business condition was primarily due to accelerated expansion in both output and new orders, as evidence pointed to improving customer demand and the launch of new products.
Oni added: “Input prices maintained an uptrend, but the pace of increase eased for the second consecutive month. This is also reflected in higher output prices with the steepest increase seen in the manufacturing and agriculture sectors.”
Outlook
Looking ahead, businesses remained optimistic that output would increase over the next 12 months, supported by plans to expand operations, open new branches, increase advertising, and launch new products. However, overall confidence weakened and fell to its lowest level in 12 months. More than 42 percent of respondents still expected activity to rise over the coming year.
