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. Moreover, 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 headline figure derived from the survey is the Stanbic IBTC Purchasing Managers’ Index™ (PMI®). Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration. 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.

 

 

Business activity rose solidly in January, after having returned to growth in December. That said, the rate of expansion eased from the previous month. Activity increased across three of the four monitored sectors, the exception being wholesale & retail.

 

 

Head of Equity Research West Africa at Stanbic IBTC Bank, Muyiwa Oni commented: “Nigeria’s private sector activity sustained its improvement in January 2025, albeit lower than levels seen in December 2024. We note an increase in both output (53.7 vs December 2024: 54.8) and new orders (52.6 vs December 2024: 53.2) 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.

 

 

“Elsewhere, input prices increased at a slower pace while the pace of increase in output prices is the slowest since July 2024. Headline inflation averaged 33.18% y/y in 2024 from an average of 24.52% y/y in 2023 mostly driven by significant FX depreciation; renewed petrol price increases in line with full petrol price liberalization; structurally low food supplies exacerbated by high extreme weather conditions; and increased food demand, especially during the festive season.

 

 

“We expect a moderation in the inflation rate in 2025 although the pace of the moderation is only likely to be faster in late Q3:25. Notably, we expect headline inflation to average 30.5% y/y in 2025 and end the year at 27.1% y/y. “In 2025, we project the non-oil sector to grow by 3.2% y/y from an estimated 3.0% y/y in 2024,” he stated.

 

 

Oni also predicted   likely growth  across manufacturing and trade, with ICT, finance and insurance  continuing to play a big role in economic performance.

 

 

He, however, believed the Agriculture Sector does not hold such hope; since the sector, he stated, is still likely to  lag its long-term average amid lingering internal security challenges, high input costs, and extreme weather conditions.

 

 

The report also shows  signs of inflationary pressures softening in January, adding that rates of increase in both input costs and output prices remained elevated, with the rises, in both cases, much  weaker than seen in December.