Nigeria’s private-sector economy showed a stronger pace of expansion in September, according to the latest Stanbic IBTC Purchasing Managers’ Index (PMI).
The index rose to 56.4 in September from 54.3 in August, reaching its highest level since February 2022. The result points to improving business conditions and suggests that economic activity is gaining momentum despite continued pressure on companies from rising costs.
The PMI is an important measure of private-sector activity because it provides an early indication of how businesses are performing. A reading above 50 signals expansion, while a reading below 50 indicates contraction.
Register for the next Tekedia Mini-MBA.
Register for Tekedia AI in Business Masterclass.
Join Tekedia Capital Syndicate and co-invest in great global startups.
With Nigeria’s PMI comfortably above the 50-point threshold, September’s result indicates that businesses experienced stronger activity during the month. The increase from 54.3 to 56.4 is particularly significant because it represents a broad improvement in the pace of expansion.
The strongest reading since February 2022 suggests that companies are seeing greater demand and are becoming more active in responding to market opportunities. It provides a positive signal for the wider Nigerian economy, where businesses and consumers have faced substantial economic pressures in recent years.
A stronger PMI can reflect improvements in new orders, output, employment and business confidence. When companies receive more orders and anticipate continued demand, they are more likely to increase production, purchase supplies and expand their operations.
This can create a positive cycle in which stronger business activity supports employment, household incomes and overall economic growth. The September figures reveal an important challenge. Input prices increased at their fastest pace in three months, meaning businesses are paying more for materials, services and other inputs required to operate.
This creates a difficult environment for companies because stronger demand does not necessarily translate into higher profits when operating costs are rising at the same time. The pressure from higher input costs can have several consequences.
Companies may attempt to protect their profit margins by raising prices, but doing so could make products and services less affordable for consumers. Alternatively, businesses may absorb some of the additional costs, which could weaken profitability and reduce their ability to invest, hire workers or expand.
The combination of strong economic activity and rising input prices therefore presents a mixed picture. On one hand, the PMI indicates that Nigeria’s private sector is becoming more resilient and that demand is supporting expansion.
On the other hand, persistent cost pressures could limit how sustainable that growth becomes if businesses continue to face expensive materials, services and other operating expenses.
The September PMI highlights the importance of controlling inflation while maintaining economic momentum. Strong growth is beneficial when it translates into greater production, investment and employment. But if higher demand is accompanied by accelerating business costs, inflationary pressures can become more difficult to manage.
Overall, the latest Stanbic IBTC PMI provides an encouraging sign for Nigeria’s economy. The rise to 56.4 shows that private-sector activity is expanding at its strongest pace in more than four years.
Yet the increase in input prices serves as a reminder that businesses are still operating under significant cost pressures. The challenge for the months ahead will be maintaining this momentum while ensuring that rising costs do not undermine business confidence, investment and consumer purchasing power.