Though the Nigerian non-public sector remained in development territory halfway by way of the second quarter of the 12 months, there have been indicators of a slowdown within the newest survey interval as inflationary pressures remained elevated. Charges of growth in output and new orders eased in Might, whereas employment dipped for the primary time in six months. The headline determine derived from the survey is the Stanbic IBTC Bank Buying Managers’ Index™ (PMI®). Readings above 50.0 sign an enchancment in enterprise circumstances on the earlier month, whereas readings beneath 50.0 present a deterioration. The headline PMI registered 52.7 in Might, remaining above the 50.0 no change mark for the sixth successive month and signaling a stable strengthening of enterprise circumstances over the month. That mentioned, the newest studying was down from 54.2 in April and pointed to the least marked enchancment within the well being of the non-public sector since January.
Muyiwa Oni, Head of Fairness Analysis West Africa at Stanbic IBTC Bank commented: “Enterprise circumstances stay within the expansionary territory for the sixth consecutive month in Might amid continued enchancment in buyer demand which can also be making certain companies launch new merchandise. Nevertheless, the tempo of enchancment in enterprise circumstances slowed relative to April, pointing to the least marked enchancment since January. Whereas new orders have now elevated in every month since November 2024, some corporations implied that market circumstances are softening. Therefore, the tempo of enchancment in new orders throughout Might eased to the weakest degree in 4 months. Nonetheless, rising gross sales and better buyer numbers supported a pronounced output development throughout the wholesale & retail and manufacturing sectors.
Given the rising gross sales and better buyer numbers, firms elevated their amount of purchases for the sixth consecutive month whereas the speed of stock accumulation quickened to a three-month excessive. Nevertheless, enter prices stay excessive in Might, albeit barely softer than April inflation, with the tempo of worth improve remaining effectively above the sequence common. Because of this, output costs remained sharp as firms handed on the rising buy prices to clients. The place firms charged decrease costs, they indicated that it was as a result of want to draw clients. This partly supported the easing of the low in Might. the tempo of output worth inflation to a two-year low in Might. Nigeria’s enterprise situation is on the right track to finish Q2:25 on a optimistic momentum, albeit comparatively weaker than witnessed in Q1:25. That is as forex weak spot, greater uncooked materials prices, and elevated transport costs have been extra pronounced than seen in Q1:25. Nevertheless, as inflation is predicted to stay softer in comparison with the 2024 common, rates of interest are prone to be decrease this 12 months, thereby serving to to assist the medium-term {economic} development path. Subsequently, we nonetheless preserve our expectation that the Nigerian economic system is prone to develop by 3.5% y/y in actual phrases in 2025 relative to three.4% y/y development in 2024.”
The slowdown in general development was seen throughout each output and new orders, which every elevated on the slowest charges in 4 months. The place expansions had been recorded, panelists linked this to buyer demand enhancements, greater consumer numbers and new product launches. Output elevated throughout all 4 broad sectors lined by the report, with development sharpest in wholesale & retail and manufacturing. Inflationary pressures remained elevated in Might, regardless of easing barely from April. Buy prices rose quickly amid greater uncooked materials costs, forex weak spot and elevated transportation prices. Employees prices had been additionally up, however on the slowest tempo since March 2023 as a discount in employment acted to restrict the rise in wage payments.
Workforce numbers decreased for the primary time in six months as some corporations reported that difficulties paying employees had led to resignations. Shortages of employees contributed to a second successive rise in backlogs of labor, however respondents indicated that the primary issue holding up the completion of tasks was delays in funds from clients. The newest rise in excellent enterprise was the sharpest since February 2023. Whereas employment decreased, firms continued to increase their buying exercise at a fast tempo. Respondents talked about the necessity to fulfill each present and future consumer necessities.
In flip, shares of purchases additionally rose, and on the quickest tempo in three months. Competitors amongst suppliers and immediate funds resulted in an additional shortening of suppliers’ supply instances, albeit one which was the least marked in 2025 up to now. Enterprise confidence waned for the fourth consecutive month and was among the many lowest on document. That mentioned, firms remained optimistic that output will increase over the approaching 12 months, with optimistic sentiment linked to enterprise growth plans, advertising and marketing and restocking.
