Nigeria’s private sector continued to expand in April, even as firms grappled with rising fuel-related costs that forced selling prices to climb to their highest level in 16 months.
The latest Purchasing Managers’ Index (PMI), jointly compiled by Stanbic IBTC Bank and S&P Global—and endorsed by the National Bureau of Statistics—showed that while business activity remained in growth territory, inflationary pressures intensified and increasingly shaped pricing decisions across sectors.
A central takeaway from the report was the intensity of cost pass-through across businesses: “The pass-through of increased input costs to customers resulted in a further sharp rise in output prices, with the rate of inflation quickening to the fastest since December 2024,” the survey stated.
This surge in pricing was largely linked to higher fuel costs driven by global geopolitical tensions, particularly disruptions associated with the Middle East conflict.
PMI signals steady expansion as index rises again
The headline PMI climbed to 52.4 in April, up from 51.9 in March, remaining above the 50-point threshold that indicates improving business conditions.
The report noted that “the Nigerian private sector remained in growth territory… as customer numbers and market demand continued to strengthen,” reflecting sustained demand across key sectors.
However, it also stressed that “the impacts of higher fuel costs as a result of the war in the Middle East were felt again, pushing up prices and reportedly limiting expansions in new orders and business activity.”
Demand improves, but inflation slows momentum
New orders continued to increase solidly, supported by stronger customer demand. Still, the pace of growth softened as rising prices reduced purchasing power and constrained expansion plans.
Business activity also rose slightly faster than in March, but firms reported that inflationary pressures restricted output growth potential.
Sector-wise performance was mixed: three of the four monitored sectors recorded growth, while the services sector contracted, underscoring uneven recovery patterns across the economy.
Cost pressures intensify across wages, hiring, and supply chains
Input costs remained elevated throughout April. Purchase prices increased sharply, with inflation hovering close to March’s 15-month peak.
The report highlighted that “anecdotal evidence suggested that prices were often driven higher by increased fuel costs due to the war in the Middle East,” reinforcing how external energy shocks continue to influence domestic pricing.
In response, some firms raised wages to help employees cope with higher transportation and living costs, leading to a modest increase in staff expenses.
Employment continued to rise, but only marginally. Hiring momentum slowed to its weakest level in three months, even as firms attempted to manage rising workloads.
Operational strain builds as backlogs and supply pressures rise
Work backlogs increased for the third consecutive month, driven by staff shortages, delayed customer payments, and difficulties sourcing raw materials.
At the same time, businesses expanded purchasing activity for the 17th straight month, reflecting continued demand and efforts to secure inputs early.
Inventories of raw materials rose at the fastest pace in five months, suggesting both stronger demand expectations and precautionary stockpiling.
To reduce supply disruptions, firms prioritised prompt payments to suppliers. This helped improve delivery times, although the pace of improvement was the weakest recorded so far this year.
Confidence improves despite inflation headwinds
Business sentiment strengthened in April, with about half of surveyed firms expecting output growth over the next 12 months. Expansion plans include opening new branches, increasing stock levels, and entering new markets.
The PMI survey covered responses from around 400 private-sector companies collected between April 9 and April 28, spanning agriculture, manufacturing, construction, wholesale, retail, and services.
The index is a diffusion measure where readings above 50 indicate expansion and those below 50 signal contraction in business conditions compared with the previous month.
Expert outlook: stronger growth ahead, but uneven sector performance expected
Commenting on the findings, Head of Equity Research West Africa at Stanbic IBTC Bank, Muyiwa Oni, said: “The health of Nigeria’s private sector improved in April… as new orders increased in line with higher customer numbers and rising demand even as price pressures remain prevalent.”
He added that firms raised selling prices “to the highest level since December 2024 in response to rising fuel and raw material costs,” while also adjusting wages upward in response to inflationary pressures.
Looking ahead, Oni projected Nigeria’s economy to grow by 4.22% year-on-year in 2026, compared with 3.87% in 2025, driven mainly by non-oil sector expansion.
He expects the non-oil sector to grow by 4.24%, with services projected at 5.64%, supported by investment inflows into oil and gas, solid minerals, electricity, agriculture, and manufacturing.
However, he warned that the oil sector may slow, with growth projected at 3.01% in 2026, down from 8.50% in 2025, as crude production is expected to average 1.70 million barrels per day.
Taken together, the PMI data paints a picture of an economy still expanding but increasingly constrained by persistent cost pressures—particularly fuel-driven inflation that is shaping prices, hiring decisions, and output growth across sectors.