The latest data from the Stanbic IBTC Purchasing Managers’ Index (PMI) survey suggests that Nigeria’s private sector expansion pace is slowing down as inflationary pressures and declining employment persist.

The headline PMI stood at 52.7 in May, indicating an improvement in business conditions for the sixth consecutive month. However, the figure dropped from 54.2 in April, marking the slowest rate of growth since January 2025.

A reading above 50.0 signifies expansion, while one below that level indicates contraction.

According to the report, a significant development in May was the first decline in employment levels in six months. Some firms cited difficulties in paying staff, leading to voluntary resignations.

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“While staff costs increased, the pace of wage growth slowed to its weakest since March 2023, partially due to the shrinking workforce.”

The reduction in staff numbers contributed to a rise in backlogs of work for the second month in a row. However, respondents noted that delayed customer payments were a more prominent factor behind the project delays. The accumulation of outstanding business was the most pronounced since February 2023.

The Stanbic PMI report indicated that output and new orders increased in May, although at the slowest rate in four months.

“Businesses attributed the gains to increased customer demand, higher client numbers, and new product launches. Growth was seen across all four key sectors, with wholesale & retail and manufacturing recording the sharpest expansions,” it said.

Despite the continued expansion, inflationary pressures remained elevated, driven by rising raw material costs, currency depreciation, and higher transportation expenses. Although input price inflation eased slightly compared to April, it remained a key concern for businesses.

Read also: Business confidence rises to 14-month high on easing inflation

Despite the challenges, the report said firms continued to ramp up purchasing activity, aiming to meet current and anticipated client needs. This resulted in the fastest build-up in inventories in three months.

On the supply side, supplier delivery times improved again, albeit at the slowest pace recorded in 2025. Businesses attributed the efficiency gains to competition among vendors and prompt payments.

“Although subdued, optimism persists among firms, with expectations of output growth over the next 12 months. Planned business expansion, marketing strategies, and inventory restocking were cited as reasons for the cautious optimism,” the report said.

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