Higher fuel costs remained a key feature of the survey, resulting in sharper increases in both purchase costs and selling prices. The headline figure derived from the survey is the Stanbic IBTC Purchasing Managers’ Index™ (PMI®). Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.
Although dipping from September’s reading of 56.4 to 55.7 in October, the headline PMI continued to signal a marked improvement in business conditions at the start of the final quarter of the year. The health of the private sector has now strengthened in nine consecutive months. Companies recorded another rapid increase in new orders during October, with the rate of expansion only slightly slower than that seen in September, when growth was the fastest since early-2022. Panelists reported that greater customer demand and the launch of new products had been the main drivers of the latest rise in new business, which was the ninth in as many months.
Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank commented: “Business conditions as measured by the headline PMI has remained in the expansionary territory for the ninth consecutive month, although it moderated to 55.7 points in October from 56.4 in September. The breakdown shows output and new orders were slightly weaker than the levels seen in September. Nonetheless, panelists continue to cite improved customer demand and introduction of new products as key drivers driving improvement in business activities in recent months. Job creation was also modest but improved in agriculture and manufacturing sectors with survey participants linking this to higher new orders. Output prices maintained their uptrend in line with continuous increase in fuel and transportation costs, which are feeding into an increase in cost of production. Panelists also indicated that prices of building materials and food produce increased during the month. Staff costs also increased modestly during the month, linked to the need to encourage employees to take on more work as well as help them deal with higher living costs.
Given a likely stronger GDP growth print in Q3:26 and the H1:26 actual growth outcome of 4.16% y/y, we retain our expectation that the Nigerian economy is likely to grow by 4.27% y/y in 2026 and 4.65% y/y thereafter in 2027. Exchange rate stability and moderation in consumer prices are seen to continue to support business planning while the government’s investment drive in key sectors should help support overall GDP growth. Overall, we estimate the Agriculture (4.50% y/y vs 2025: 2.92% y/y) and Manufacturing (3.37% y/y vs 2025: 1.41% y/y) sectors will likely see the biggest jump in growth compared to 2025 while Services GDP is likely to grow by 4.47% y/y (vs 2025: 4.14% y/y).”
Higher new orders and the introduction of new products contributed to a further sharp rise in business activity. Here too, the rate of growth was only slightly weaker than in the previous month. Output rose across all four monitored sectors. Despite the sharp increase in new orders, firms reported being able to keep on top of workloads and reduced outstanding business for the third month running. Although modest, the rate of depletion was the largest since January. A lack of pressure on capacity meant that companies increased their staffing levels only slightly, and at the slowest pace in three months. Nonetheless, job creation has now been recorded in each month since June 2025. Rising employment in the agriculture and manufacturing categories contrasted with falls in wholesale & retail and services.
While workforce numbers rose only slightly again in October, firms in Nigeria continued to ramp up their purchasing activity. Growth was linked both to current inflows of new orders and preparations for future projects. In turn, stocks of purchases also increased markedly, albeit at a slower pace than in September. Prompt payments, less traffic disruption and positive responses to requests for faster deliveries meant that vendor lead times shortened again, the fourth month running in which this has been the case.
Turning to prices, higher fuel costs drove a sharp and accelerated monthly increase in purchase prices in October, with the pace of inflation at a four-month high. Staff costs also increased, albeit to a lesser extent than in the previous month. As such, the marked increase in purchase prices was the main factor leading companies to increase their selling prices at a faster pace. Here too, the rate of inflation was at a four-month high, but remained weaker than the spike seen earlier in the year following the outbreak of war in the Middle East.
Expectations of continued improvements in customer demand alongside planned advertising and business investment supported ongoing optimism in the year-ahead outlook for business activity. Sentiment remained strongly positive, despite easing slightly from September.
