According to the latest Stanbic IBTC Bank PMI report, the index fell to 49.7 in January, a significant drop from the 53.5 recorded in December 2025.

While readings above 50.0 indicate expansion, the January figure, the first sub-50.0 reading in 13 months, suggests a marginal deterioration in the health of the private sector, though analysts describe the current state as “broadly stable.”

The Post-Festive Hangover

The decline is largely attributed to a stagnation in new orders, ending a 14-month growth streak. Market analysts suggest this “lull” is a typical seasonal trend following the aggressive spending witnessed during the December festive period.

Muyiwa Oni, head of Equity Research for West Africa at Stanbic IBTC Bank, noted that while January usually sees lower activity than December, this particular reading carries extra weight.

“This is the first time in the history of the PMI survey (since 2014) that the January headline PMI will be below the 50-point threshold,” Oni stated, suggesting that deeper structural issues may be at play alongside the seasonal quiet.

Sectoral Performance: Retail Struggles While Services Hold Firm

The weakness was not uniform across the economy. The data revealed a sharp divide between sectors: Wholesale & Retail: Experienced a significant contraction, falling deep below the growth threshold. Agriculture, Manufacturing, and Services: All maintained growth, posting readings above 50.0.

Despite the stagnation in orders, Nigerian firms continued to expand their workforces. Employment increased for the eighth consecutive month, as companies sought to motivate staff amid rising living costs.

This increase in headcount, combined with stable order books, allowed firms to clear backlogs of work at the fastest rate since March 2025.

Inflationary Pressures Return

A concerning trend in the January report was the sharp rise in output prices, which hit a four-month high. Companies reported that faster rises in purchase prices and raw material costs forced them to pass these expenses onto consumers.

Staff costs also surged at the most marked pace since July 2025, driven by wage increases aimed at helping employees navigate higher inflation.

Outlook: A 4.1% Growth Projection

Despite the “negative surprise” of the January data, Stanbic IBTC remains bullish on Nigeria’s economic trajectory for the rest of the year.

The bank maintains a GDP growth forecast of 4.1% y/y for 2026.

“We expect demand to pick up in subsequent months,” Oni added. The optimistic outlook is anchored by several “forward-linkage” factors, including:

• Infrastructure & Investment: Visible government activity in livestock development and trade facilitation.
• Energy Sector: The continued impact of the Dangote Refinery on the broader economy.
• Monetary Stability: Anticipated lower interest rates and a stabilized exchange rate are expected to boost private consumption and business investment.

While business sentiment dipped slightly in January, the majority of Nigerian firms remain confident that output will rise over the next 12 months, supported by planned expansions and hopes for a resurgence in domestic demand.

According to the latest Stanbic IBTC Purchasing Managers’ Index (PMI), business conditions remained comfortably in expansion territory for the tenth consecutive month, a sign that the country’s economy is not just stabilizing, but steadily finding its rhythm.

Though the headline PMI eased slightly to 53.4 in September from 54.2 in August, it still reflected a solid strengthening of the private sector. Behind this figure is a story of businesses pushing forward despite headwinds: output rose sharply across sectors, customer demand improved, and new product launches kept orders flowing.

Perhaps most encouraging is the cooling of inflationary pressures. For the first time in more than five years, companies reported their purchase costs rising at the slowest pace, allowing firms to expand production without the heavy burden of surging expenses. This easing cost environment also spurred job creation, with employment levels climbing at the fastest rate since late 2023.

“We’re seeing Nigerian businesses end the quarter on strong footing,” said Muyiwa Oni, head of Equity Research West Africa at Stanbic IBTC Bank. “The PMI numbers reflect improved output, new orders, and softer inflationary pressures. Even though the pace of growth moderated from August, the overall outlook remains positive.”

Beyond the PMI data, the broader economy is reflecting momentum. Nigeria’s GDP grew by 4.23% year-on-year in Q2 2025, driven by robust gains in agriculture and oil, alongside strong contributions from ICT, finance, and real estate. Analysts are now projecting GDP growth of 4.5% in Q3 2025, with a full-year forecast revised upward to 4.0% from 3.5%, thanks to rebasing and better-than-expected sectoral performance.

For businesses on the ground, these numbers translate into cautious optimism. Firms are hiring more, building inventory, and investing in expansion. Input costs, while still rising, are at their softest levels since early 2020, giving companies room to plan long-term.

Looking ahead, Nigeria’s private sector appears poised to keep momentum into 2026, supported by expectations of lower interest rates, easing inflation, and a more stable exchange rate. While challenges remain, the trend lines suggest a business environment slowly tilting toward growth and opportunity.