Demand and Slight Inflation Relief
Nigeria’s private sector has posted its strongest performance in nearly two years, as a surge in consumer demand and a modest decline in inflationary pressure combine to breathe fresh life into business activity across the country. According to the latest Purchasing Managers’ Index (PMI) data compiled by Stanbic IBTC Bank, the month of August 2025 saw the highest level of private sector expansion in 19 months, reflecting renewed optimism among firms.
The PMI, a closely watched indicator of business confidence, rose significantly—crossing the 50-point mark that signals growth in economic activity. Analysts say this upward movement was driven by increased customer demand, improved access to input materials, and a more stable macroeconomic environment.
Although inflation remains high by global standards, recent data from the National Bureau of Statistics (NBS) shows a slight easing in the inflation rate compared to previous months, offering some breathing space for businesses grappling with rising costs.
Firms across key sectors—including agriculture, manufacturing, services, and construction—reported higher output and new orders in August. This marks a noticeable turnaround from earlier in the year, when economic uncertainty, fuel subsidy removal, and a volatile naira had weighed heavily on business confidence. The report also noted that employment levels have begun to improve, with companies ramping up recruitment to meet rising demand.
One of the critical factors underpinning the latest uptick is improved consumer spending, which had been severely constrained by months of elevated inflation and declining real incomes. However, slight currency stability and more consistent fuel supply have helped reduce input costs for many businesses, allowing for more competitive pricing and, in turn, greater customer turnout.
Despite the positive momentum, challenges persist. Businesses continue to cite difficulties accessing foreign exchange, high energy costs, and logistical bottlenecks. Nevertheless, the overall sentiment appears to be shifting in a more optimistic direction. With the Central Bank of Nigeria maintaining tighter monetary policy and the federal government signalling new support for small and medium enterprises, market watchers believe the current trajectory may be sustainable—provided reforms are followed through effectively.
For many observers, this latest data signals cautious but growing confidence in the Nigerian economy. While much work remains to be done to tame inflation and stabilise the exchange rate, the private sector’s resilience in the face of economic headwinds is being seen as a promising sign for the months ahead.