Nigerian firms confronted a muted begin to 2026. A broad stagnation of latest orders led to a lot slower rises in output and buying exercise. More positively, employment continued to extend at a broadly related tempo to that seen on the finish of 2025. Meanwhile, sooner rises in buy costs and workers prices led firms to extend their promoting prices on the sharpest tempo in 4 months. The headline determine derived from the survey is the Stanbic IBTC Purchasing Managers’ Index™ (PMI®). Readings above 50.0 sign an enchancment in enterprise situations on the earlier month, whereas readings beneath 50.0 present a deterioration. The headline PMI dipped to 49.7 in January, properly down from December’s studying of 53.5 and ticking beneath the 50.0 no-change mark. Nevertheless, by posting near the impartial threshold, the newest determine signalled broadly steady enterprise situations firstly of the yr.
Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank commented: “After 13 months of consecutive studying above the 50 level no-change mark, Nigeria’s personal sector exercise deteriorated to 49.7 factors in January from 53.5 in December. This is as new orders stagnated following a 14-month sequence of progress – doubtless linked to the weak demand that often happens within the begin of the yr after the festive-induced spending in December of the prior yr. Historical knowledge previously six years additionally confirms this, the place headline PMI in January was decrease than December of the prior yr apart from January 2024. Indeed, the weak enterprise exercise was extra pronounced within the wholesale & retail which was deep beneath the 50-point progress threshold on a seasonally adjusted foundation, whereas agriculture, providers and manufacturing exercise witnessed progress within the interval as they have been all above 50.0 factors.
“Nonetheless, this is the first time in the history of the PMI survey (since 2014) that January headline PMI will be below the 50-point psychological threshold, thereby likely signaling deeper issues aside quiet activity that usually occurs in January after festive-induced improvements in December. Elsewhere, output prices increased markedly to a four-month high in January, with the companies linking this to higher purchase costs. “Despite the negative surprise in the PMI numbers in January, we still see the Nigerian economy growing by 4.1% y/y in 2026 as we expect demand to pick up in subsequent months after the lull seen at the beginning of the year. Notably, the government has been visible in infrastructure, livestock development, easing trade constraints, and attracting investments in oil & gas and manufacturing. Aside from that, the Dangote refinery is expected to continue to have forward-linkage impact on other sectors of the economy. Additionally, likely lower interest rates in line with lower inflation and exchange rate stabilization should support private consumption and business investments in 2026. Because of these factors, we see more sectors contributing to real GDP growth rate in 2026 compared to 2025, likely translating to an improvement in the quality of lives of the citizens compared to the last two years when the citizens witnessed the full negative impact of the government’s flagship reforms.”
The image illustrated by the headline index was in step with the information for output and new orders, each of which have been little modified in January. While some firms reported elevated buyer numbers, this was cancelled out by different companies that talked about demand weak spot, that means that new orders stagnated following a 14-month sequence of progress. In flip, output rose solely marginally. In each circumstances, nonetheless, sector knowledge confirmed that weak spot firstly of the yr was centred on wholesale & retail firms. Meanwhile, progress was recorded in agriculture, manufacturing and providers. Purchasing exercise and shares of inputs additionally elevated at a lot slower charges than in December, in step with a stagnation of latest orders. The price of job creation was broadly in step with that seen within the earlier month, in the meantime, remaining slight. Staffing ranges have now elevated in every of the previous eight months.
A mix of rising employment and broadly steady new orders meant that firms have been in a position to scale back their backlogs of labor for the primary time in three months, and to the most important diploma since March 2025. Purchase costs elevated sharply in January amid widespread studies from panellists of upper uncooked materials prices. The tempo of inflation ticked as much as a three-month excessive. Staff prices additionally rose at a sooner tempo, and one which was probably the most marked since July final yr. Respondents indicated that that they had raised wages in an effort to encourage staff and assist them with greater dwelling prices. The price of output worth inflation quickened to a four-month excessive amid widespread studies of upper buy prices being handed by means of to clients. That mentioned, the tempo of inflation remained among the many weakest for the reason that COVID-19 pandemic. Business sentiment dipped, however firms remained assured that output will rise over the approaching yr. Optimism was linked to deliberate expansions, better inventory holdings and hopes for greater new orders.
