Nigeria’s Private Sector Growth Slows in June as Output Weakens, But Business Optimism Reaches Two-Year High

The private sector of Nigeria experienced a slight deceleration of growth in June 2025, the purchase managers of the IBTC Stanbic Bank (PMI) falling at 51.6 from 52.7 in May.

The last figure marks the slowest expansion in seven months and continues a downward trend that started after the PMI peak in March. Despite the loss of momentum, the commercial prospects have been strengthened, with confidence among the companies that have reached its highest point since August 2022.

Reading the PMI of June, although above the neutral threshold 50.0 which separates the expansion of the contraction, highlights a cautious mood in the private sector of Nigeria while companies are struggling with mixed signals in the economic environment. Although demand remains solid and inflationary pressures have softened, manufacturing, logistics and infrastructure challenges continue to weigh on global activity.

The weakness of manufacturing lowers production growth

The most important contributor to the slowdown in overall production came from a sharp drop in manufacturing activity, which contracted in particular after showing signs of resilience earlier in the year. Although other sectors such as services and construction continue to grow, the pace of expansion in these areas also slowed down in June.

The head of research on the actions of Stanbic IBTC for West Africa, Muyiwa Oni, noted that “the rate of expansion slowed down for the third consecutive month after having culminated in March”, reflecting increasing caution among Nigerian companies. The June PMI score of 51.6 is below the average of 2025 of 53.1, confirming that the economy increases but at a reduced pace.

New companies and orders remain positive but softening

Although the growth in production has softened, new businesses have continued to develop between the sectors, although a slower pace. This suggests that demand remains present in the economy, although the intensity of this request has moderate. Companies that have declared a higher activity have highlighted customer acquisitions and successful marketing strategies, but have also noted that persistent economic uncertainty has led certain customers to delay spending or reduce purchases.

In the middle of the activity of the activity, companies become more optimistic about the coming months. The report has shown that the future production index – a measure of commercial expectations – jumped at 83.9 in June from 70.9 in May. This is the highest level of optimism recorded since August 2022.

Respondents have linked their optimism to the expectations of better access to financing, operational expansion and improvement in consumer demand. Several companies have declared that they plan to strengthen investments and introduce new ranges of products or services in anticipation of better economic conditions.

Inflation pressures continue to facilitate

The inflationary pressures, which had dominated economic titles throughout 2024, showed new signs of softening. Although prices remain high according to historical standards, June marked the second consecutive month of slower price increases.

Cost inflation for companies, especially in raw materials and logistics, has moderated due to more stable exchange rates and supply chains improvements. While manufacturers have further declared a sharp increase in input and production prices compared to other sectors, the increase in increase has been the slowest observed in more than two years.

For consumers, this trend can offer a certain relief, in particular after a year of arrow price which eroded purchasing power and triggered generalized public dissatisfaction. Companies through the sectors have declared to adapt to the new costs of costs by rationalizing operations and looking for cheaper suppliers to maintain margins without transmitting too many costs to customers.

Employment is stable, purchases slow down

The employment levels were largely stable in June, companies retaining their workforce after a slight reduction in May. Most companies have awarded the decision to stabilize the hiring to a prudent perspective and the desire to manage costs while the conditions of the demand have remained uncertain.

The purchase activity, however, reflected the broader slowdown in production. Although companies have continued to acquire inputs and stocks in anticipation of future growth, the rate of purchase has slowed considerably. Respondents cited concerns about new moderate orders and the need to carefully manage stocks in an environment where cash flows remain a concern.

Persistent challenges: arrears, logistics and supply disturbances

The arrears of work increased for the third consecutive month in June, while companies struggled with unfinished orders. Companies have indicated that equipment shortages, erratic food, delayed customer payments and ineffectiveness of the transport network were major causes in the realization of projects or delivery of goods.

Some companies have also reported persistent logistical bottlenecks such as a key obstacle. Road infrastructure problems and supplier delivery delays were frequently mentioned, contributing to the slowness of the work permit.

Unlike previous months when suppliers’ delivery times had improved, June has not recorded any significant change in the efficiency of delivery. This marks a break in the progress observed since March 2023 by shortening deadlines, companies noting that they were again struggling with the unpredictability in the arrival times of the entries.

Perspectives: growth always on the right track but fragile

While the Data from the PMI of June indicates that the private sector of Nigeria is still in positive territory, the underlying fragility of this growth cannot be overlooked. A weakening manufacturing sector, persistent power problems and uncertain demand could weigh heavily in the coming months if they are not addressed.

However, the jump marked in the confidence of companies offers a promising counterweight. If the expectations of improving macroeconomic financing and stability are materialized, companies can accelerate hiring, investment and production in the second half of 2025.

Analysts believe that the ability of the economy to maintain a positive dynamic will depend on the speed with which structural problems – in particular around infrastructure, energy and financing – can be resolved.