Nigeria's private sector continued its growth trajectory in April, with the Stanbic IBTC Purchasing Managers' Index (PMI) climbing to 52.4 points. This marks the third consecutive month above the 50-point threshold, indicating improving business conditions. However, inflationary pressures, particularly rising fuel costs linked to the Middle East conflict, have pushed input prices to a 16-month high, slowing the pace of expansion.
Mixed Signals from Central Bank Data
In contrast, a separate survey by the Central Bank of Nigeria (CBN) reported that its PMI slipped into contraction for the first time in 16 months, falling to 49.4 points. The services and industrial sectors were the main contributors to this decline, entering contraction territory.
Demand Growth Tempered by Rising Prices
Despite the overall improvement, firms reported that higher fuel costs constrained output growth. New orders increased solidly during the month, but the rate of expansion softened as rising prices weighed on demand. Business activities expanded in three of the four monitored sectors, with services being the only segment to record a decline.
Cost Pressures and Price Pass-Through
Anecdotal evidence from the survey highlighted that escalating fuel costs, driven by the ongoing war in the Middle East, were a key factor behind price increases. Input costs rose sharply, with purchase price inflation remaining close to March's 15-month high. Firms passed these higher costs on to customers, resulting in a marked increase in output prices—the fastest pace since December 2024. Staff costs also edged higher as some employers adjusted wages to cushion the impact of rising transportation fares on workers.
Employment and Backlogs
Employment levels rose during the month as firms responded to higher workloads, but the pace of job creation was marginal and the weakest in three months. Some businesses cited staff shortages, payment delays from customers, and difficulties in securing raw materials as factors contributing to a buildup in outstanding work, which increased for the third consecutive month.
Expert Outlook
Muyiwa Oni, Head of Equity Research, West Africa at Stanbic IBTC Bank, noted that the private sector's performance reflected improving demand conditions even as inflation remained a concern. "The health of Nigeria's private sector improved in April, remaining above the 50-point growth threshold for the third consecutive month, as new orders increased in line with higher customer numbers and rising demand even as price pressures remain prevalent," he said. Oni added that although new orders strengthened, persistent inflation continued to limit expansion. "Companies increased their selling prices in April to the highest level since December 2024 in response to rising fuel and raw material costs. Staff costs also increased modestly as some companies increased their staff pay to help them with increasing transportation fares," he explained.
Oni expressed optimism about the future, stating that the sustained improvement in business conditions supports expectations of stronger economic growth. "The improved start of the second quarter of the year by Nigerian businesses continues to support our view of improved growth expectations in 2026 relative to 2025. We maintain our expectation that the Nigerian economy is likely to grow by 4.22 per cent year-on-year in 2026, from 3.87 per cent in 2025," he concluded.
