By Ayomide Otitoju
The Stanbic IBTC Purchasing Managers’ Index™ (PMI®) recorded 52.0 in January, slightly down from 52.7 in December, but still signaling a second consecutive month of improvement in business conditions. Growth was recorded in three of the four monitored sectors, with wholesale and retail being the exception.
Moderating Inflation and Sectoral Outlook
According to Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank, Nigeria’s private sector continued its recovery, although at a slightly weaker pace than in December. Output (53.7) and new orders (52.6) rose, driven by stronger customer demand and increased project commitments. Employment levels also grew for the second consecutive month.
Inflation remained a concern, averaging 33.18% y/y in 2024, fueled by currency depreciation, fuel price liberalization, food shortages, and festive-season demand. However, inflation is expected to moderate in 2025, averaging 30.5% y/y and ending the year at 27.1% y/y.
Non-oil sector growth is projected at 3.2% y/y in 2025, up from 3.0% y/y in 2024, with manufacturing, trade, ICT, and finance expected to drive expansion. However, agriculture may continue to struggle due to security concerns, high input costs, and extreme weather conditions.
Improved Business Sentiment and Supply Chain Stability
Businesses remained optimistic about future growth, with expansion plans and marketing strategies boosting confidence to its highest level since the survey’s inception 11 years ago.
Inflationary pressures showed signs of easing, with input cost increases slowing to their weakest level since April 2024. Output price inflation also softened, reaching its lowest pace in six months.
Companies increased staffing, purchasing, and inventory levels to meet customer demands efficiently. Notably, stock accumulation was at its highest in 18 months, while backlogs of work declined at the fastest rate since June 2022. Supply chains remained stable, with faster delivery times due to strong vendor relationships and prompt payments.
Despite slight moderation in growth, Nigeria’s private sector outlook remains positive, supported by steady demand, improved sentiment, and easing cost pressures.
