Nigeria’s business activity resumes decline after first rise in six months
By Mary Adenike
Business activity in Nigeria dropped in January despite the increase in output for the second month and after expanding in December for the first time since June, according to a new Purchasing Managers’ Index (PMI).
The latest monthly PMI by Stanbic IBTC Bank released on Monday showed the headline index fell to 52.0 from 52.7 in the previous month. Readings above 50.0 signal an improvement in business conditions, while those below show deterioration.
“Still above the 50.0 no-change mark and therefore signalling a second successive monthly improvement in the health of the Nigerian private sector. The nascent growth in the Nigerian private sector seen at the end of 2024 was sustained into the first month of 2025, with new orders and business activity each continuing to rise,” the report said.
It added that there was a large improvement in business confidence while firms expanded employment, purchasing, and inventories. “Although input costs and output prices continued to rise rapidly, respective rates of inflation were much slower than seen in December.”
The PMI index, which measures the performance of the private sector, is derived from a survey of 400 companies in the agriculture, manufacturing, services, construction, and retail sectors.
It is a composite index based on five individual indexes with the following weights: new orders (30 percent), output (25 percent), employment (20 percent), suppliers’ delivery times (15 percent), and stock of items purchased (10 percent), with the delivery times index inverted so that it moves in a comparable direction.
“Activity increased across three of the four monitored sectors, except wholesale & retail. Signs of improving customer demand and a greater willingness among clients to commit to new projects supported the rise in output and also contributed to the growth of new orders,” the Stanbic report said.
It said the case with activity, new business increased for the second month running, but at a softer pace than in December.
“Companies were also much more optimistic regarding the future in January, with business expansion plans and marketing activities set to support output growth over the coming year. Although remaining relatively muted overall, the uplift in sentiment seen at the start of the year was the largest since the survey began just over 11 years ago.”