Nigeria’s private sector is seeing renewed strength as employment levels hit their highest in nearly two years. According to the latest Purchasing Managers’ Index compiled by S and P Global and released by Stanbic IBTC Bank on Friday, the PMI rose to 54.0 in July 2025, the strongest figure since April and a clear sign that the non-oil private sector is expanding at a solid pace. This marks the eighth consecutive month of positive business performance.
The report explained the meaning behind the numbers:
“The headline figure derived from the survey is the Purchasing Managers’ Index™️ (PMI®️). Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration”
The July figure of 54.0 represents a noticeable jump from June’s 51.6, signalling solid improvement in business health across board.
Stronger demand triggers sharp rise in hiring
The spike in employment is largely tied to growing customer demand. As businesses received more orders and saw a boost in output, they were pushed to increase capacity by hiring more staff. According to the survey, employment growth in July was the highest recorded since October 2023.
Respondents in the survey linked the surge in new orders to rising customer demand and successful product launches. This in turn drove up output levels. In fact, July recorded the strongest month for both new orders and output since April.
To manage this growing workload, many firms took the step of hiring additional workers, which helped stabilise the backlog of work that had been building for three straight months.
The report further explained:
“Rising new orders and efforts to speed up the completion of projects encouraged firms to take on extra staff at the fastest pace since October 2023. Extra workforce capacity meant that companies were able to keep backlogs of work broadly stable, following increases in each of the prior three months”
However, the increase in hiring didn’t come without added costs. While overall inflationary pressures on inputs eased, staff cost inflation hit a five-month high, mainly because companies tried to cushion employees from high transportation costs.
Input cost inflation slows, allowing better stock management
One major relief for firms in July was the softening of purchase price inflation. For the third month in a row, purchase costs rose at a slower pace, reaching the weakest rate of increase since April 2020. Despite ongoing concerns like currency depreciation and rising raw material costs, businesses reported more flexibility in sourcing and purchasing goods.
This greater flexibility allowed for a sharp rise in purchasing activity, helping companies build up inventories more aggressively. Better performance from suppliers, including shorter delivery times, also contributed to this improvement.
Additionally, selling prices rose more slowly in July, as output price inflation eased to its lowest level since May 2023. Some firms were even able to offer discounts to customers, thanks to the drop in purchase costs. This strategy helped them boost sales and stay competitive in a crowded market.
Business outlook dips slightly, but optimism remains
Even though the numbers look promising, there was a slight drop in overall business confidence. After a near three-year high in optimism recorded in June, sentiment in July moderated slightly. However, most firms still remain hopeful.
The report noted:
“Companies remained optimistic that output will rise over the coming year, but sentiment eased from the near three-year high posted in June. Those firms that predicted an increase in output linked this to plans to raise capital for business expansions and advertising”
This slight dip in optimism may reflect a sense of caution among businesses, especially given the ongoing volatility in exchange rates and stubborn cost pressures. Still, the mood remains generally positive as many businesses are making plans to scale up operations and improve outreach.
PMI points to solid third quarter for non-oil economy
Overall, the July data suggests that Nigeria’s private sector is entering the third quarter on a strong footing. All five key PMI components—output, new orders, employment, stocks of purchases, and supplier delivery times—showed improvement, indicating a broad-based recovery.
The data was gathered between July 10 and 29 and reflects how Nigerian businesses are adapting in a difficult economic climate. With strategic hiring, improved supply chains, and smart cost management, firms appear to be carving out space for growth despite ongoing challenges.
If this momentum continues, the second half of 2025 could see stronger private sector contributions to Nigeria’s GDP—particularly outside of the oil sector.