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Stanbic IBTC Bank PMI shows output and new orders accelerating, though employment remains muted amid rising fuel costs.
Nigeria’s private sector activity improved to its strongest level in nine months during May 2026, with the Stanbic IBTC Bank Purchasing Managers’ Index (PMI) rising to 54.1 points from 52.4 in April, according to a report released by S&P Global.
The growth was fueled by increasing customer demand and new product rollouts across the broader economy. Output and new orders both recorded accelerated expansions, hitting seven-month and nine-month highs respectively. Firms ramped up their purchasing activity accordingly.
Employment Growth Muted Despite Output Expansion
While output and new orders strengthened, employment growth remained muted. Sustained job creation has now been recorded for twelve consecutive months, but only at modest levels. Work backlogs increased for the fourth straight month, driven by customer payment delays, material shortages, and power failures.
Input Costs Rise on Fuel Prices, But Inflation Softens
On the price front, higher fuel costs—following the outbreak of war in the Middle East—continued to drive sharp increases in input costs and output prices. Purchase costs rose rapidly again, though inflation eased to a three-month low. Staff costs rose modestly, with some companies increasing pay to help workers cope with higher living costs, particularly transportation.
Output prices continued to rise sharply in May, but the rate of inflation eased to its lowest level since February.
Sector Performance and Vendor Improvements
Output growth was recorded across all four broad sectors covered by the survey: agriculture, manufacturing, construction, and services.
Efforts to secure inputs were aided by improved vendor performance. Prompt payments, good arrangements with suppliers, and better road conditions helped speed up deliveries.
Optimism Remains Despite Sentiment Dip
Plans to increase advertising, open new branches, and introduce new products underpin optimism for the year-ahead outlook. However, sentiment dipped to its lowest level in a year.
Commentary from Stanbic IBTC Bank
Commenting on the report, Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank, said: “Private sector activity in Nigeria improved to its best level in nine months, with the headline PMI rising to an impressive 54.1 points in May from 52.4 points in April. This impressive business condition was primarily due to accelerated expansion in both output and new orders as evidence pointed to improving customer demand and the launch of new products.”
He added:
“Input prices maintained an uptrend, but the pace of increase eased for the second consecutive month. This is also reflected in higher output prices, with the steepest increase seen in the manufacturing and agriculture sectors.”
GDP Growth and Sector Breakdown
According to the National Bureau of Statistics (NBS), the Nigerian economy grew by 3.89% year-on-year in Q1 2026, slightly below the 3.99% estimate implied by the Stanbic IBTC Bank PMI. The deviation stems from lower-than-expected non-oil sector growth.
The oil sector grew by a modest 2.57% year-on-year, while non-oil sector growth slowed to 3.94% from 3.99% in Q4 2025.
The six biggest drivers of GDP growth in Q1 2026 were agriculture, manufacturing, construction, information and communication, trade, and finance and insurance. These sectors accounted for 82.4% of real GDP growth during the quarter.
2026 Outlook
Oni noted that electioneering activity, the government’s continuous investment-attraction drive, and improved infrastructure spending should keep the non-oil sector active during the year.
He added: “We retain our expectation that crude oil production will likely average 1.7 million barrels per day in 2026, up from 1.64mbpd recorded in 2025. We do not see production touching the 2.0mbpd psychological benchmark until at least 2030.”
Given the lower-than-projected real GDP growth in Q1 2026, the economy may now grow by 4.13% year-on-year in 2026, down from an initial forecast of 4.22%, compared with 3.87% in 2025.
