Growth within the Nigerian personal sector continued to achieve momentum throughout August as buyer demand improved and inflationary pressures softened. Sharper will increase in output and new orders have been recorded, though charges of enlargement in buying exercise and employment eased. Meanwhile, enterprise confidence softened however companies remained optimistic that output will improve over the approaching yr. The headline determine derived from the survey is the Stanbic IBTC Purchasing Managers’ Index™ (PMI®).
Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank commented: “Business exercise elevated additional in August and has remained above 50 factors for the ninth consecutive month. The improve in enterprise exercise was pushed by sharper will increase in output and new orders. Notably, output (56.8 factors vs July: 56.1 factors) elevated according to clients’ willingness to decide to new initiatives, whereas the expansion in new orders (58.3 factors vs July: 57.3 factors) quickened to a 19-month excessive amid reviews of accelerating buyer demand. Given these increased new orders, companies expanded their staffing ranges for the third consecutive month.
The opening of recent branches and advertising and marketing plans are additionally supporting companies’ optimism that output will improve over the approaching yr. Elsewhere, enter value eased to its lowest degree since March 2023 at the same time as the most recent improve continues to be above the sequence common. In line with this, the speed of improve in output costs moderated for the fourth consecutive month in August and the slowest since April 2020. The continued moderation of enter and output costs nonetheless means that inflation is prone to stay mushy within the close to time period, and should incentivize the MPC of the CBN to change to an accommodative financial coverage by September from the present impartial stance. Indeed, we estimate headline inflation to average additional in August to 21.45% y/y – 21.63% y/y, and presumably settle at 17.19% y/y – 17.92% y/y by November.
Accordingly, we nonetheless anticipate as much as 150 bps cumulative price reduce in 2025. Nigeria’s rebased economic system exhibits actual GDP rising by 3.13% y/y in Q1:25 – slower than the three.76% y/y revised progress in This fall:24 – and in addition the bottom since Q1:24 when the economic system grew by 2.27% y/y. At 78.6%, relative to 70.0% in This fall:24, providers contributed essentially the most to GDP progress in Q1:25, however agriculture shrank to 0.5% in Q1:25, from 19.7% in This fall:24. Industries in Q1:25 contributed a powerful 20.9%, from 10.4% in This fall:24, according to our long-held view that industries ought to begin contributing extra to actual GDP progress from 2025 amid the structural shift launched into the sector by the operations of Dangote Refinery. Overall, the Nigerian economic system continues to be on monitor to develop by 3.5% y/y in 2025 from 3.4% y/y progress seen in 2024 supported by softer inflation, enchancment in FX liquidity situations, and structural reforms.”
Readings above 50.0 sign an enchancment in enterprise situations on the earlier month, whereas readings beneath 50.0 present a deterioration. At 54.2 in August, the headline PMI was above the 50.0 no-change mark for the ninth month operating, signalling a sustained enchancment within the well being of the Nigerian personal sector. Moreover, the most recent studying was up from 54.0 in July, pointing to a strong strengthening of enterprise situations and one which was essentially the most pronounced since April. The rise within the headline index primarily mirrored sharper expansions in output and new orders, with charges of progress hitting four- and 19-month highs respectively. Panellists reported stronger buyer demand and a better willingness amongst shoppers to decide to new initiatives. Output elevated throughout three of the 4 broad sectors lined by the survey, the exception being manufacturing. While companies continued to broaden staffing ranges in response to increased new orders, the speed of job creation was solely slight and softer than that seen in July. Companies have been nonetheless in a position to deplete excellent enterprise for the f irst time in 5 months.
A slower improve in buying exercise was additionally registered in August. Nonetheless, enter shopping for rose markedly in response to enhancing buyer demand, with constructive expectations for the longer term additionally encouraging companies to build up inventories. Expectations for output progress over the approaching yr mirrored predictions of upper new orders, the opening of recent branches and promoting exercise. Sentiment eased for the second month operating, nonetheless, and was comparatively muted. Inflationary pressures waned halfway by way of the third quarter. The tempo of improve in buy costs slowed for the fourth consecutive month and was the weakest since March 2020. Meanwhile, the tempo of employees value inflation eased to a 3 month low. Where wages elevated, panellists linked this to incentives for quicker undertaking supply and cost-of-living funds. In line with the image for enter prices, the tempo of output value inflation additionally eased in August, slowing for the fourth month operating to the weakest in nearly five-and-a-half years. The newest rise was additionally softer than the sequence common, regardless of remaining marked as firms handed increased prices by way of to their clients.
