Nigeria’s private sector showed signs of recovery in February as the Stanbic IBTC Bank Purchasing Managers’ Index (PMI) rose to 53.2, up from 49.7 in January. This increase signals an improvement in business conditions after a brief contraction at the start of the year.
The latest PMI reading, released on Monday, highlights a solid monthly recovery in the private sector’s health. Business conditions have been improving steadily since December 2024, except for the January dip.
The PMI, compiled by S&P Global and endorsed by the National Bureau of Statistics (NBS), uses a scale where readings above 50.0 indicate growth compared to the previous month.
Key Insights from the Report
The report explained:
- The PMI is a key indicator of business conditions. Readings above 50.0 show improvement, while those below 50.0 indicate a decline.
- After falling to 49.7 in January, the PMI rebounded to 53.2 in February, reflecting a strong recovery in the private sector.
- Business conditions have consistently improved since December 2024, apart from January’s temporary setback.
The recovery was driven by a rise in new orders, supported by stronger customer demand and better product affordability. Surveyed firms reported higher customer numbers and new product launches, which led to the fastest output growth in four months.
All four monitored Nigeria’s private sector expanded in February, with wholesale and retail bouncing back after January’s contraction.
Employment and Operational Challenges
- Employment rose for the ninth straight month, with staffing levels increasing at the fastest rate since October 2025.
- Despite more hiring, backlogs of work grew at the quickest pace since May 2020 due to delayed client payments, staff shortages, material supply issues, and power challenges.
- Companies responded to higher demand by increasing purchasing activity and inventory levels significantly.
Suppliers’ delivery times improved further, aided by prompt payments and better traffic conditions.
Expert Commentary
Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank, noted that stronger customer demand drove higher new product offerings at competitive prices. This helped output and new orders regain momentum in February.
Easing Inflationary Pressures
The naira’s appreciation contributed to a slowdown in inflation during February.
- Purchase cost inflation dropped to its lowest level in over six years, though some firms still faced higher costs for animal feed and raw materials.
- Staff costs continued to rise, partly due to cost-of-living adjustments.
- With input costs easing, firms raised output prices at the slowest rate since January 2020.
The report attributed the softer price environment to the naira trading below N1,400 per dollar since late January. This was supported by stronger external accounts, increased offshore FX inflows, improved remittances, and Central Bank interventions to stabilize the currency.
Outlook
Business sentiment improved in February, though it remained relatively cautious.
