Nigerian businesses are weathering the storm, maintaining a strong confidence in the economy despite a slight moderation in growth. This resilience is evident in the latest Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI), which settled at 52.0 in January, according to the bank’s report.
While slightly lower than December’s 52.7, the index remained comfortably above the crucial 50.0 mark, signalling continued expansion in the private sector for the second consecutive month. A confluence of factors fuels this positive trajectory, including improving customer demand, increasing willingness to commit to new projects, and surging business confidence.
“Readings above 50.0 signal an improvement in business conditions on the previous month,” the PMI report states. “The headline PMI posted 52.0 in January, down from 52.7 in December but still above the 50.0 no-change mark and therefore signalling a second successive monthly improvement in the health of the Nigerian private sector.”
This sustained growth is reflected in a continued upward trajectory of business activity, with firms expanding operations to meet rising demand. While the pace of new orders increased, it did so at a slightly slower rate than in December. However, the employment landscape saw a positive shift, with companies hiring more workers for the second consecutive month.
A significant development is the easing of inflationary pressures. Input costs and output prices rose at a much slower rate compared to December, offering some respite to businesses grappling with rising operational costs. This positive trend is in line with Stanbic IBTC analysts’ projection of a further moderation in headline inflation in 2025, with an expected average of 30.5%, down from 33.18% in 2024.
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“Nigeria’s private sector activity sustained its improvement in January 2025, albeit lower than levels seen in December 2024,” said Muyiwa Oni, Head of Equity Research, West Africa at Stanbic IBTC Bank. “We note an increase in both output and new orders, although slightly weaker than that seen at the end of 2024, on account of improving customer demand and more willingness to commit to new projects. Given the rising new orders, companies took on additional workers in January – representing the second month running in which this has been the case.”
The latest PMI reading of 52.0 reinforces a growing sense of resilience and optimism within Nigeria’s private sector. This confidence is palpable in the steady expansion of businesses, increased hiring activities, and a significant rise in inventory stockpiling.
For businesses, the sustained growth in new orders suggests that consumer and corporate demand is stabilising. This provides a more stable foundation for firms to plan long-term investments and expansion strategies with greater confidence. The fact that employment levels have now risen for two consecutive months indicates that businesses are not only experiencing increased demand but are also actively positioning themselves for future growth opportunities.
Moreover, the moderation in inflation could lead to more predictable cost structures. This allows businesses to price their goods and services competitively without the need for aggressive price hikes. This is particularly crucial for manufacturers, traders, and service providers who rely on stable supply chains and predictable input costs.
While challenges remain, particularly in sectors like agriculture, the improving economic environment presents significant opportunities for agile and responsive businesses. Firms that prioritise efficiency, innovation, and customer engagement are well-positioned to thrive in the evolving Nigerian market.
