Yemisi Izuora
The Head of Equity Research West Africa at Stanbic IBTC Bank, Muyiwa Oni, says Nigeria’s private sector witnessed an increase in output at the end of Q2, 2026 as higher demand and new product development supported an increase in sales volume for companies.
Improving demand conditions helped to support further increases in output and new orders in Nigeria’s private sector at the midway point of the year.
Rising workloads and the prospect of further growth in the months ahead meant that firms took on additional staff and raised both purchasing activity and inventory holdings.
Input costs and output prices increased sharply again, albeit to lesser extents than immediately following the outbreak of war in the Middle East.
The headline figure derived from the survey is the Stanbic IBTC 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.
Oni, noted that though the rate of growth slowed in June compared to May, the private sector witnessed an increase in output at the end of Q2:26 and the rising demand led to higher workload, thereby ensuring the private sector hired new staff across three of the four sectors monitored by the survey besides agriculture. Business confidence also rose to a 12-month high with firms citing the ability to secure new stocks; business expansion plans; and advertising efforts as key factors making them expect an expansion in output over the next one year. Input prices still increased but not up to what was witnessed during the onset of the United States/Israel – Iran war.
The effect of this was a passthrough impact on output prices amid rising cost of raw materials and transportation. “The PMI print during the quarter is consistent with a likely 3.94% y/y GDP growth rate in Q2:26, higher than the 3.89% y/y growth seen in Q1:26. We retain our 2026 growth forecasts at 4.1% as we see the oil sector growing by 3.45% y/y in 2026, from 8.50% y/y in 2025, while the non-oil sector is likely to grow by 4.11% y/y, from 3.71% y/y in 2025. The risks to our outlook include country-wide insecurity which may constrain food production, exchange rate pressures resurfacing, extreme-weather related conditions and higher fertilizer prices impacting crop yield, and a volatile global environment which may affect sentiment and constrain capital flows.” he said.
The headline PMI posted 53.4 in June, down slightly from May’s reading of 54.1, but still above the 50.0 no-change mark and signalling a solid monthly improvement in business conditions at the end of the second quarter. The health of the private sector has now strengthened in five successive months. Panellists often reported improving customer demand in June.
This, alongside the introduction of new products, helped lead to a further marked rise in sales volumes. With new orders up and companies expanding their operations, output also increased. In both cases, however, rates of growth were softer than seen in May. Business activity expanded across three of the four broad sectors covered by the survey, the exception being manufacturing.
Companies were also optimistic that output will rise over the coming year, and sentiment improved markedly to the strongest since June 2025. Advertising efforts, business expansion plans and stockpiling were among the factors supporting confidence, according to respondents. Improving customer demand and confidence in the year ahead outlook encouraged companies to expand their staffing levels, purchasing activity and inventories in June. Employment increased for the thirteenth consecutive month. The rate of job creation was modest, but the most marked since February.
The latest expansion in purchasing was marked and the same as that seen in May, while stocks of inputs were up solidly. Despite increased operating capacity, backlogs of work continued to rise amid customer payment delays and power supply issues. Supply-chain delays were also evident as vendor lead times lengthened for the first time in a year. Longer delivery times were often attributed to poor road conditions. Higher costs for fuel, raw materials and transportation resulted in a further sharp rise in purchase prices during June, albeit the rate of inflation eased to a four-month low. Staff costs, meanwhile, increased at a sharper pace as companies helped their workers deal with rising living costs.
The pass-through of higher input costs to customers resulted in a further marked rise in selling prices, and the pace of inflation ticked up from May.