Nigeria’s private sector sustained its expansionary run in July 2026 as robust customer demand drove a continuous rise in new orders, even though overall business activity experienced a slight deceleration.
The latest Stanbic IBTC Bank Nigeria Purchasing Managers’ Index, compiled by S&P Global, registered at 52.5 in July, down from 53.4 in June. Despite marking the weakest reading in three months, the index remained above the 50.0 threshold, signaling a sixth consecutive month of improvement in business conditions.
Demand and Sectoral Performance
Firms recorded a marked increase in new business during July, extending the current growth streak to six months. Survey respondents attributed this expansion to stronger customer demand, competitive pricing strategies, and the introduction of new products.
While output growth moderated to its slowest pace since January, agriculture and manufacturing posted strong output growth. Conversely, the services, wholesale, and retail sectors recorded more modest increases.
Employment also expanded during the month as firms hired additional workers to meet production requirements, though the pace of job creation eased to a three-month low. Businesses simultaneously increased purchasing activity, resulting in a marked rise in inventories.
Easing Cost Pressures and Inflation Projections
Inflationary pressures showed signs of softening in July, with both input costs and output prices rising at weaker rates than in June. Purchase cost inflation recorded the sharpest moderation, easing to its lowest level in five months.
In line with softer input cost inflation, firms increased their selling prices at the slowest pace since February. Agriculture recorded the strongest increase in selling prices, while services experienced the weakest rate of price inflation among the surveyed sectors.
Muyiwa Oni, Head of Equity Research for West Africa at Stanbic IBTC, noted that input costs increased at their slowest pace in five months. He stated that this moderation in cost pressures mirrors the slight easing in Nigeria’s headline inflation, which slowed to 15.91% in June from 15.93% in May.
Oni projected that annual inflation could ease further to around 15.72% in July due to favorable base effects, though month-on-month inflation is expected to rise compared to June. He retained Stanbic IBTC’s 2026 GDP growth forecast at 4.1%, with the oil sector expected to grow by 3.45% and the non-oil economy by 4.11%.
However, Oni warned that insecurity, renewed exchange rate pressures, adverse weather conditions, rising fertilizer prices, and global economic uncertainty remain key risks that could weigh on food production and capital inflows.
