Admin I Tuesday, July 01, 2026
LAGOS — Nigeria’s private sector closed out the first half of the year on a solid footing, driven by sustained domestic demand, sharp increases in new orders, and a surge in corporate optimism that has reached its highest level in a year.
According to the latest headline Stanbic IBTC Purchasing Managers’ Index™ (PMI®) data released for June, business conditions in Africa’s largest economy improved for the fifth consecutive month.
The headline PMI printed at 53.4 in June. While this represents a slight moderation from the 54.1 recorded in May, the figure remains comfortably above the 50.0 threshold that separates expansion from contraction, signaling a robust and resilient economic trajectory heading into the second half of the year.
Growth Anchored by Domestic Demand and Job Creation
The expansion at the end of the second quarter was primarily underpinned by strong customer demand and successful corporate strategies, including new product rollouts and aggressive advertising campaigns.
This influx of new business prompted firms to ramp up their output and increase purchasing activity.
Confronted with mounting workloads and an increasingly positive outlook for the next 12 months, Nigerian businesses expanded their payrolls.
Employment within the private sector rose for the thirteenth consecutive month, marking the fastest pace of job creation seen since February. Recruitment was broad-based, spanning three of the four major sectors monitored by the survey, with agriculture being the notable exception.
However, this rapid operational scaling has not come without friction. Despite increased hiring, backlogs of work continued to pile up, exacerbated by chronic structural challenges. Survey respondents highlighted persistent customer payment delays and erratic power supply as primary bottlenecks.
Furthermore, vendor lead times lengthened for the first time in a year, a delay frequently blamed on the country’s poor road infrastructure.
Easing Geopolitical Pressures Soften Cost Inflation
A key relief for the macroeconomic environment was the stabilization of global cost pressures. While input costs and output prices climbed sharply, the rate of inflation eased compared to the dramatic spikes observed immediately following the outbreak of hostilities between the United States, Israel, and Iran.
”Input prices still increased but not up to what was witnessed during the onset of the United States/Israel – Iran war,” noted Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank.
Nevertheless, domestic inflationary pressures remain a stark reality for Nigerian citizens and corporations alike. Companies reported a sharper rise in staff costs as they proactively adjusted wages to help employees cope with the elevated cost of living.
To preserve margins against the backdrop of rising fuel, raw material, and transport costs, firms continued to pass these expenses down the line, resulting in a marked uptick in final selling prices compared to May.
The positive PMI data has bolstered optimism regarding Nigeria’s broader economic performance. Stanbic IBTC analysts indicate that the business activity tracked during the quarter aligns with an estimated year-on-year GDP growth rate of 3.94% for Q2, up from the 3.89% growth recorded in Q1.
The bank maintains its full-year GDP growth forecast for the year at 4.1%. This projection expects a structural rebalancing: the non-oil sector is anticipated to accelerate to 4.11% (up from 3.71% previously), offsetting a projected moderation in the oil sector’s growth, which is expected to cool to 3.45% following a strong 8.50% performance in the prior year.
While the underlying fundamentals point toward steady expansion, analysts warn that Nigeria’s economic recovery remains highly vulnerable to structural shocks.
According to Oni, several domestic and external headwinds could still derail this momentum. Chief among these is country-wide insecurity, which threatens to severely constrain domestic food production.
Additionally, the economy faces potential disruptions from a resurgence of exchange rate pressures, volatile global capital flows, and extreme weather conditions—the latter compounded by high fertilizer prices that could negatively impact agricultural crop yields in the coming months.