Stronger demand, easing inflation and naira stability drive renewed expansion after January slowdown….
Nigeria’s private sector regained growth momentum in February, as the Stanbic IBTC Bank Purchasing Managers’ Index (PMI) rose to 53.2 from 49.7 in January, signaling a renewed improvement in business conditions after a brief contraction at the start of the year.
The latest PMI report, compiled by S&P Global and endorsed by the National Bureau of Statistics (NBS), shows that business activity strengthened solidly during the month. Readings above the 50.0 threshold indicate expansion compared to the previous month, while figures below that mark signal contraction.
After dipping below the neutral 50.0 level in January, the index rebounded sharply in February, pointing to a broad-based recovery in private sector health. Except for January’s setback, business conditions have improved consistently since December 2024.
Demand and Output Drive Recovery
The February rebound was largely fueled by a renewed rise in new orders, supported by stronger customer demand and improved product affordability.
Surveyed firms reported increased customer footfall and the introduction of new product offerings, contributing to a marked acceleration in output, the fastest pace recorded in four months.
All four major sectors tracked in the survey posted growth during February. Wholesale and retail, which had contracted in January, returned to expansion, reinforcing the broader recovery trend.
Employment also strengthened for the ninth consecutive month, with staffing levels rising at the quickest pace since October 2025.
Despite sustained hiring, backlogs of work increased at their fastest rate since May 2020. Firms attributed the buildup to delayed client payments, shortages of materials and staff, as well as persistent power supply challenges.
To meet rising demand, companies ramped up purchasing activity and expanded inventory holdings significantly. Supplier delivery times shortened further, aided by prompt payments and improved traffic conditions.
Inflation Pressures Ease as Naira Firms
According to Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank, stronger customer demand helped restore momentum in both output and new orders during February.
The report also highlighted a notable moderation in inflationary pressures, partly driven by an appreciation of the naira. The currency has traded below N1,400 per dollar since late January, supported by improved external accounts, higher offshore FX inflows and stronger remittances, alongside central bank interventions.
Purchase cost inflation slowed to its weakest level in just over six years, although some firms continued to report rising prices for animal feed and raw materials. Staff costs increased, partly reflecting cost-of-living adjustments, but output price inflation eased to its slowest pace since January 2020.
Outlook for Growth
Business sentiment improved in February, though optimism remained measured. Advertising initiatives and expansion plans were cited as key drivers of confidence for the next 12 months.
Stanbic IBTC projects Nigeria’s real GDP to expand by 3.86 percent year-on-year in the first quarter of 2026 and 4.1 percent for the full year. Growth is expected to be supported by infrastructure spending, livestock development, easing trade constraints, renewed investment in oil and gas and manufacturing, as well as forward linkages from the Dangote refinery.
The February PMI survey was conducted between February 10 and 25, 2026, drawing responses from around 400 private sector firms spanning agriculture, mining, manufacturing, construction, wholesale, retail and services.
