Nigeria: Manufacturing Decreases Amidst Increasing Economic Productivity in Other Sectors - Report

The Stanbic IBTC's Purchasing Managers' Index (PMI) report for June 2026 stated that manufacturing recorded a decrease in output even though improving demand helped to support further increases in output of Nigeria's private sector in the first half of 2026.

According to the report, the health of the private sector has now strengthened in five successive months as business activity expanded across three of the four broad sectors covered by the survey, the exception being manufacturing.

It said: "As has been the case in each month since December 2024, business activity increased in Nigeria's private sector during June. The latest rise was solid, albeit slower than that seen in May. According to respondents, higher output reflected a range of factors including stronger client demand, rising customer numbers and the opening of new branches."

The report said that June data pointed to a 13th consecutive monthly increase in employment in the Nigerian private sector.

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"The latest rise was slight but the sharpest since February. Where new staff were hired, panellists linked this to increased workloads. Employment rose in three of the four monitored sectors, the exception being agriculture," it said.

It added that purchasing activity rose markedly again in June, with the rate of expansion unchanged from that seen in May.

"Input buying has now increased in each of the past 19 months. Higher purchasing generally reflected rising client demand, with some firms also reporting that inputs had been secured ahead of expected increases in new orders in the months ahead," the report said.

It, however, said that the rate of overall input cost inflation remained substantial in June and was slightly faster than in May as more than 41 per cent of respondents signalled a rise over the month, adding that sector data pointed to marked increases in input prices across the board, with manufacturing posting the strongest pace of inflation.

"Although purchase costs continued to rise sharply during June, the rate of inflation eased for the third successive month from March's recent peak and was the softest since February. Panellists reported higher costs for fuel, raw materials and transportation.

"Rises in costs for raw materials and transportation led Nigerian companies to increase their own selling prices accordingly. Charges rose rapidly during June, with the rate of inflation slightly faster than seen in May but weaker than in March and April. Output prices increased sharply across all four monitored sectors," the report said.

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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, thereby signalling a solid monthly improvement in business conditions at the end of the second quarter.

It said that input costs and output prices increased sharply again, albeit to lesser extents than immediately following the outbreak of war in the Middle East.

Commenting on the PMI report, Head of Equity Research West Africa at Stanbic IBTC Bank, Mr. Muyiwa Oni, said that although the rate of growth slowed in June compared to May, Nigeria's private sector witnessed an increase in output at the end of Q2:26 as higher demand and new product development supported an increase in sales volume for companies.

Oni said that this 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 pass through impact on output prices amid rising cost of raw materials and transportation."