Nigerian private sector activity slipped into mild contraction in January, as new orders stalled and output growth slowed following a strong finish to 2025, according to a survey published.
The Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 49.7 in January from 53.5 in December, dropping below the 50.0 mark that separates expansion from contraction. The reading signalled a slight deterioration in overall business conditions and marked the weakest performance since early 2024.
The decline reflected a broad stagnation in new orders, ending a 14-month run of sustained growth. While some companies reported higher customer numbers, these gains were offset by weaker demand elsewhere, leaving overall order volumes little changed during the month.
As a result, output growth slowed sharply. Business activity rose only marginally in January, following a more robust expansion at the end of last year, suggesting that momentum faded at the start of 2026.
Sector-level data showed that the slowdown was concentrated in wholesale and retail trade, where activity fell below the growth threshold. In contrast, agriculture, manufacturing and services continued to expand, helping to keep the headline PMI close to the neutral level and pointing to broadly stable conditions across much of the economy.
Purchasing activity and input inventories also rose at much slower rates than in December, consistent with subdued demand. At the same time, firms reported faster increases in purchase prices and staff costs, reflecting ongoing inflationary pressures.
Survey respondents, drawn from a panel of around 400 private sector companies, said wage increases were implemented to motivate workers and help them cope with higher living costs. Many firms also passed on higher input costs to customers through increased selling prices.
As a result, the pace of output price inflation accelerated to a four-month high, although it remained among the weakest recorded since the COVID-19 pandemic. Cost pressures, while persistent, were therefore less severe than those seen earlier in Nigeria’s recent inflation cycle.
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Employment remained one of the brighter spots in the survey. Staffing levels continued to rise at a pace broadly similar to that seen at the end of 2025, suggesting companies were retaining confidence in underlying demand despite the near-term slowdown.
Business sentiment dipped in January but remained positive overall. Firms said they expected output to increase over the coming year, supported by planned expansions, higher inventory holdings and expectations of stronger new orders in the months ahead.
Commenting on the report, Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank, said the January reading represented a notable break from recent trends.
“After 13 months of consecutive readings above the 50-point no-change mark, Nigeria’s private sector activity deteriorated to 49.7 points in January from 53.5 in December,” Oni said. “This is as new orders stagnated following a 14-month sequence of growth, likely linked to the weak demand that usually occurs at the start of the year after festive-induced spending in December.”
Oni noted that historical data over the past six years shows January PMI readings are typically lower than those in December, with the exception of January 2024. However, he added that the latest figure was unusual.
“This is the first time in the history of the PMI survey, which began in 2014, that the January headline PMI has fallen below the 50-point threshold,” he said, suggesting that deeper structural factors may be weighing on activity beyond seasonal effects.
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Despite the softer start to the year, Stanbic IBTC maintained its outlook for Nigeria’s economy to grow by 4.1% in 2026, supported by an expected pickup in demand, ongoing infrastructure investment, easing trade constraints and increased investment in oil, gas and manufacturing.
The bank also cited the continued operations of the Dangote refinery, expectations of lower interest rates amid easing inflation, and greater exchange rate stability as factors likely to support consumption and business investment later in the year.
