Nigeria’s private sector activity returned to growth in February, marking a recovery from a slow start to the year as new orders increased and inflationary pressures moderated. The latest Purchasing Managers’ Index (PMI) from Stanbic IBTC Bank rose to 53.2 in February from 49.7 in January, moving above the 50.0 threshold that separates expansion from contraction.
The rebound was driven by a return to growth in new orders, supported by improved customer demand and better product affordability. Output also increased at its fastest rate in four months. All four monitored sectors—manufacturing, services, wholesale and retail, and agriculture—reported higher activity, with wholesale and retail recovering after a January decline.
Employment grew for the ninth consecutive month, with the rate of hiring the strongest since October. However, backlogs of work accumulated at the sharpest pace since May 2020, linked to delayed payments, staff shortages, material supply issues, and power outages. Firms increased purchasing and inventory buildup to meet stronger demand, while supplier delivery times continued to improve for an eighth straight month.
Input cost inflation slowed to its weakest level in over six years, partly due to the naira’s appreciation against the US dollar. Output price inflation also decelerated sharply to its lowest since January 2020, though most firms still raised prices, passing on earlier cost increases.
Muyiwa Oni, Head of Equity Research West Africa at Stanbc IBTC Bank, attributed the rebound to stronger demand and competitive pricing, noting that currency appreciation helped ease price pressures. “The naira has traded below 1,400 to the US dollar consistently since late January, supported by strengthening external accounts, higher foreign exchange inflows, and improved remittances,” he said.
Oni also projected that the Nigerian economy is on track to grow 3.86% year-on-year in Q1 2026, with full-year growth forecast at 4.1%. He cited government infrastructure investment, livestock development, trade facilitation, and the Dangote refinery’s linkages as positive drivers. “Lower interest rates, alongside disinflating trends and exchange rate stabilisation, should support private consumption and business investment,” he added.
Business confidence improved slightly in February, with over 53% of firms expecting output to rise over the next year, backed by advertising and expansion plans. The PMI reading suggests the private sector has regained momentum early in the first quarter, providing a tentative positive signal for broader economic performance.
