Nigeria’s private sector recorded stronger growth in May 2026, but rising fuel prices continued to place pressure on businesses across the country. According to the latest Purchasing Managers’ Index (PMI) report released by Stanbic IBTC Bank, increased petroleum product costs remained a major factor driving up operating expenses despite a slight easing in inflation.
The report revealed that businesses faced another month of rising purchase costs, largely due to higher fuel expenses linked to ongoing tensions and conflict in the Middle East. Although the pace of inflation slowed to its lowest level in three months, companies still experienced significant increases in the cost of buying goods and services needed for their operations.
While purchase costs climbed sharply, employee-related expenses increased at a slower pace. Many firms that raised salaries did so to help workers cope with the increasing cost of living, particularly transportation expenses, which have been heavily affected by fuel price increases.
Businesses also continued to pass some of these higher costs on to consumers. As a result, selling prices remained elevated in May, although the rate of increase was slower compared to previous months.
Despite these challenges, business confidence remained positive. Many companies expressed plans to expand operations by opening new branches, launching new products, and increasing advertising efforts. However, overall optimism about future business conditions declined to its lowest level in a year.
The PMI data showed that private sector activity improved significantly during May. Companies reported stronger output and higher customer demand, leading to increased purchasing activities. New orders also rose sharply, indicating growing economic activity across several sectors.
The headline PMI increased to 54.1 points in May from 52.4 points in April. Since any reading above 50 signals expansion, the latest figure reflects a healthy improvement in business conditions and marks the strongest performance since August 2025.
According to Muyiwa Oni, Head of Equity Research for West Africa at Stanbic IBTC Bank, the stronger PMI reading was mainly driven by increased production and growing customer demand. He noted that businesses benefited from the introduction of new products and improved market activity.
Manufacturing and agriculture recorded some of the strongest increases in output prices, reflecting the impact of higher production costs in these sectors.
Meanwhile, data from the National Bureau of Statistics showed that Nigeria’s economy expanded by 3.89 percent in the first quarter of 2026. Although this represented solid growth, it was slightly below forecasts based on PMI data.
Growth in the oil sector slowed significantly to 2.57 percent compared to 6.79 percent recorded in the previous quarter. The non-oil sector also experienced a modest slowdown, growing by 3.94 percent.
The strongest contributors to economic growth during the quarter were agriculture, manufacturing, construction, information and communication, trade, and finance and insurance. Together, these sectors accounted for more than 80 percent of the country’s economic expansion.
Looking ahead, analysts expect Nigeria’s economy to maintain steady growth through the remainder of 2026. Increased government investment, infrastructure development projects, and efforts to attract investors are expected to support economic activity, particularly in the non-oil sector.
Businesses also benefited from improved supplier performance in May. Faster payments, better logistics arrangements, and improved road conditions helped reduce delivery times. However, challenges such as power outages, raw material shortages, and delayed customer payments continued to affect operations.
Overall, while rising fuel costs remain a major concern for businesses, stronger demand and expanding economic activity suggest that Nigeria’s private sector continues to show resilience amid ongoing economic pressures.
