Nigerian businesses, last month, recorded their lowest purchase cost inflation in five months as stronger customer demand and rising new orders kept the private sector on a growth path for a sixth consecutive month, despite a slower pace of expansion.

The latest Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI), compiled by S&P Global, showed the headline index eased to 52.5 in July from 53.4 in June.

While this was the weakest reading in three months, it remained above the 50-point threshold, signalling an improvement in business conditions and indicating that the private sector continued to expand.

The report said businesses continued to secure new orders on the back of stronger customer demand, competitive pricing and new product launches, helping to extend the current growth streak to six months.

The report stated: “The headline PMI registered 52.5 in July, down from 53.4 in June but still above the 50 no-change mark and signalling a sixth successive monthly strengthening in the health of the private sector. The latest improvement in business conditions was solid, albeit the least pronounced in three months.”

Higher demand also lifted business activity, although output growth moderated to its slowest pace since January. Agriculture and manufacturing recorded stronger gains, while services and wholesale and retail posted more modest improvements. Firms also hired additional workers and increased purchases of production inputs to meet current demand and prepare for future workloads, leading to another rise in inventories.

Some businesses, however, reported logistical challenges that delayed project completion, resulting in a slight increase in outstanding work even as supplier delivery times improved.

A key feature of the July survey was the continued easing of inflationary pressures. Both input costs and selling prices rose more slowly than in June, with purchase cost inflation slowing sharply to its lowest level in five months.

“Inflationary pressures softened in July, with both input costs and output prices rising at weaker rates than in June. Purchase cost inflation slowed particularly sharply, easing to the lowest in five months,” the report noted.

Despite the moderation, businesses continued to contend with higher fuel and raw material costs, which kept purchase prices elevated. Staff costs also increased, although at the weakest pace since April.

In line with easing input costs, companies raised their selling prices at the slowest pace since February, with agriculture recording the strongest increase and services the weakest.

Business confidence remained positive, although it slipped slightly from the one-year high recorded in June. Just under half of the firms surveyed expect output to increase over the next 12 months, supported by stronger marketing efforts and expansion plans, including the opening of new branches.

Commenting on the report, Stanbic IBTC’s Head of Equity Research, West Africa, Muyiwa Oni, said stronger customer demand, improved pricing and new product launches helped businesses attract more orders and sustain private sector growth, even though activity moderated from June.

He said: “Nigerian businesses reported improved customer demand in July while better pricing and new product launches also helped them to capture new orders arising from the increase in demand. These factors helped to keep the private sector activity in an expansionary territory, although this moderated when compared to June.”

Oni noted that businesses also increased purchases of production inputs to meet current demand and prepare for future workloads. Although higher fuel and raw material costs continued to push up input prices, he said input costs rose at their slowest pace in five months, while selling price inflation also softened.

He added that the moderation in business costs mirrors the slight easing in Nigeria’s headline inflation, which slowed to 15.91 per cent in June from 15.93 per cent in May. He projected that annual inflation could ease further to about 15.72 per cent in July, largely due to favourable base effects, although month-on-month inflation is expected to be higher than in June.

Oni retained the 2026 economic growth forecast at 4.1 per cent, with the oil sector expected to expand by 3.45 per cent and the non-oil economy by 4.11 per cent.

He, however, warned that insecurity, renewed exchange rate pressures, adverse weather conditions, rising fertiliser prices and global economic uncertainty remain key risks that could weigh on food production, investor sentiment and capital inflows.