Nigeria’s economy continued its steady recovery in October 2025, recording its 11th consecutive month of expansion, according to data released by the Central Bank of Nigeria (CBN). The Composite Purchasing Managers Index (PMI) rose to 55.4 points from 54.0 in September, signalling stronger business confidence and expanding output across key sectors despite inflationary pressures and exchange rate volatility.
The PMI, a widely tracked indicator of private-sector performance, measures changes in business conditions across the manufacturing and non-manufacturing sectors. A reading above 50 indicates growth, while below 50 signals contraction. The latest figure suggests that Nigerian businesses remain optimistic about the economy’s trajectory, buoyed by improvements in supply chains, increased demand, and a gradual stabilisation in foreign exchange markets.
Broad-Based Sectoral Growth
Out of 36 subsectors surveyed, 25 reported expansion during the month. The agriculture sector, a major contributor to GDP and employment, led the growth momentum for the 15th consecutive month with a PMI reading of 55.7 points. The services sector followed closely at 55.6 points, reflecting robust performance in telecommunications, banking, and logistics. The industrial sector also strengthened, climbing to 54.2 points, supported by gains in manufacturing, construction, and power generation.
The report highlighted particular improvement in manufacturing output and new orders, as producers adjusted to a more stable supply of raw materials and energy inputs. Firms reported improved supplier delivery times and rising inventories, suggesting that previous disruptions caused by fuel scarcity and import bottlenecks had eased.
Employment also showed modest gains, with companies in both the manufacturing and services sectors expanding their workforce to meet higher demand. This trend offers a positive signal for the labour market, which has struggled to absorb new entrants amid sluggish job creation in previous quarters.
Drivers of Momentum
Analysts attribute the sustained PMI growth to several factors, including easing foreign exchange pressures following the CBN’s continued intervention in the FX market, improved fiscal coordination between the federal and subnational governments, and gradual recovery in domestic consumption.
The agriculture sector’s resilience is particularly significant, as it reflects policy efforts to boost local food production and reduce import dependence. Government support programmes in fertiliser distribution, mechanisation, and rural credit access appear to be yielding results, helping to moderate food inflation in some regions.
Similarly, service-sector growth has been fuelled by strong telecommunications activity and a rebound in financial services. The digital economy continues to expand rapidly, supported by increased adoption of mobile banking, fintech innovation, and data-driven services.
Economic Implications
The CBN’s PMI report adds to evidence that Nigeria’s economy is maintaining momentum despite persistent structural challenges. A sustained PMI above 50 points suggests that GDP growth could remain positive in the fourth quarter of 2025, potentially exceeding the 3.2% year-on-year growth recorded in the second quarter.
However, the expansion comes against the backdrop of rising inflation, which stood at 26.5% in September, and high borrowing costs following successive monetary policy tightening. While improved supply chain efficiency may help ease price pressures, businesses still face elevated input costs, particularly from energy and imported raw materials.
The stronger PMI reading could also bolster investor sentiment, particularly among domestic manufacturers and foreign portfolio investors seeking signs of macroeconomic stability. Yet, economists warn that sustaining growth will require consistent reforms in infrastructure, trade logistics, and power supply to ensure competitiveness.
Policy Outlook
The CBN is expected to view the latest data as a validation of its policy stance aimed at restoring economic balance and controlling inflation. Improved supplier delivery times and inventory levels point to a normalising business environment after months of volatility triggered by fuel subsidy removal and exchange rate unification.
Nonetheless, policymakers face a delicate balancing act between maintaining growth momentum and containing inflation. With the fiscal deficit widening and government borrowing on the rise, monetary authorities must manage liquidity carefully to avoid overheating the economy. The PMI report is also likely to influence expectations for the 2026 fiscal year. A continued improvement in business conditions could provide the government with fiscal space to pursue targeted spending on infrastructure and social investment without undermining private-sector growth.
Outlook for the Final Quarter
As Nigeria enters the final quarter of 2025, analysts anticipate that growth will remain robust, driven by festive season demand, agricultural output, and a rebound in trade and services. However, potential risks remain, including currency volatility, security challenges in food-producing regions, and weak consumer purchasing power.
If current momentum is sustained, the country could close the year with one of its strongest growth performances since the COVID-19 pandemic, reinforcing optimism that ongoing economic reforms are beginning to yield results.
In summary, Nigeria’s October PMI reading reflects a resilient economy that is gradually adjusting to policy shocks and external headwinds. While challenges persist, the sustained expansion signals that businesses are adapting, confidence is returning, and the path toward stable growth is slowly taking shape.
