…As Business Confidence In Real Sector Grows
The latest report on Nigerian private sector’s performance showed a slight slowdown in growth rate in June, with the Purchasing Managers’ Index (PMI) dipping to 51.6 from 52.7 in May.
The PMI, a crucial indicator of business conditions, when it remained above the neutral 50.0 mark, indicated an improvement in private sector activity.
According to the just published Stanbic IBTC Bank Purchasing Managers’ Index (PMI) report, the June index marked the slowest expansion in the private sector over the past seven months, but then business sentiment remained strong, reaching its highest level since August 2022.
The report partly reads: “The headline PMI remained above the 50.0 no-change mark for the seventh consecutive month in June. That said, at 51.6, the reading was down from 52.7 in May and the lowest in the current growth sequence.”
The latest PMI at 51.6 implied a worrisome slowdown in output growth, which had been on the upward swing since the year, with decline in manufacturing output particularly sharp, while activity in other sectors continuing to rise, albeit at a slower pace.
Commenting on the report’s findings, Head of Equity Research West Africa at Stanbic IBTC Bank, Mr. Muyiwa Oni, said: “Business conditions remain in expansionary territory for the seventh consecutive month, but the pace of expansion has slowed for the third consecutive month after peaking in March.
“The headline PMI settled lower at 51.6 points in June from 52.7 points in May, which is below this year’s average PMI print of 53.1 points”, the banker added.
Despite the slower growth, Nigerian businesses are optimistic about their performances in the months ahead, based on expectations of increased investment in operations and expansions, as the 12-month outlook for future output rose to 83.9 points in June, up from 70.9 in May, marking the highest level since August 2022.
According to the latest PMI report, the significant rise in business confidence suggests that companies are bracing for potential improvements in both the domestic and global economy, particularly as respondents to the PMI survey were optimistic that available funding would support the expansion of operations, fueling a brighter economic future for the country.
Interestingly, one of the most notable trends in the June PMI report’s findings was the continued moderation in inflationary pressures.
The report revealed that while inflation rates remained relatively sharp, cost pressures appeared to be softening, with companies raising their output prices at the slowest pace in over two years. Available data showed that May 2025 represented the second consecutive month of slower inflation, signaling that businesses are adjusting to new economic conditions.
Even then, the manufacturing sector reported the fastest increase in output prices, as companies continued to pass on higher input costs to consumers even though commodity prices were moderated by the slowdown in price hikes across other sectors, suggesting that cost increases are becoming more manageable.
The report linked the slower rate of price to improved conditions in raw material costs and a more stable supply chain.
On employment and purchasing trend, the Stanbic IBTC’s PMI report revealed that employment levels were kept broadly stable in June following a marginal reduction in May as firms that employed staff did so primarily to manage workloads, especially given the challenges posed by a mixed demand environment. While some sectors experienced increased activity, others faced a slowdown in demand, which discouraged new hires in certain industries.
Similarly, the report showed that Purchasing activity sustained its rising momentum in June, but, like output growth, the pace slowed. Respondents to the survey cited concerns over the slower growth of new business as a factor in the reduced pace of purchasing.
The PMI report further indicated that businesses were cautious in their purchasing decisions, potentially in response to softer demand conditions and ongoing uncertainties while backlogs of work continued to increase for the third consecutive month, though at a modest pace.
It disclosed that companies reported that shortages of materials, delayed payments from customers, and power supply issues were contributing to higher levels of uncompleted work just as some entities lamented that the sluggishness in backlog clearing was worsened by logistical challenges, including poor road conditions and delays in supplier deliveries.
In the month under review, the PMI survey indicated that supplier delivery times were largely unchanged in June, ending a period of shorter lead times that had been observed since March 2023.
This is even as the overall delivery time remained stable, businesses pointed out that disruptions in the supply chain were still a key challenge, particularly for those relying on timely deliveries of raw materials.
