PMI drops to 52.7 as firms cut jobs to curb wage costs
Private sector firms in Nigeria reduced their workforce in May 2025 for the first time in six months to cut rising wage expenses, according to the latest Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) report compiled by S&P Global.
The report noted that employment dipped as firms struggled with staff costs and increased voluntary resignations. The resulting reduction slowed the pace of wage increases, marking the weakest growth in staff costs since March 2023.
Labour shortages contributed to a second consecutive monthly rise in backlogs of work, with the latest increase in unfinished business being the sharpest since February 2023. Delays in customer payments were also identified as a major factor behind project completion challenges.
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The headline PMI fell to 52.7 in May from 54.2 in April, signalling the slowest improvement in business conditions since January. Though the PMI remained above the 50.0 threshold that signals growth, the pace of expansion weakened significantly.
Growth in output and new orders slowed, each rising at the slowest rate in four months. Despite this, output continued to expand across all sectors, particularly in wholesale, retail, and manufacturing.
Firms continued to increase their purchasing activity for the sixth consecutive month, and inventories rose at the fastest pace in three months in preparation for future demand.
Inflationary pressures remained high, driven by currency weakness, increased raw material costs, and higher transport expenses. However, the pace of inflation in output prices eased to a two-year low as firms attempted to attract customers by adjusting prices.
Supplier delivery times improved, but at the slowest rate in 2025 so far. Business confidence weakened further, reaching one of its lowest recorded levels, though most firms remained hopeful of output growth in the coming year.
Stanbic IBTC projects Nigeria’s economy to grow by 3.5 per cent in 2025, slightly up from 3.4 per cent in 2024, aided by expected declines in interest rates and moderating inflation.
The PMI is based on responses from around 400 private-sector firms across key sectors including agriculture, manufacturing, construction, wholesale, retail, and services.
