PMI rebounds to 53.2 as inflation hits six year low

Nigeria’s private sector rebounded strongly in February as new orders returned to growth and inflationary pressures eased to their weakest levels in over six years, according to the latest Purchasing Managers’ Index (PMI) released by Stanbic IBTC Bank.

The headline PMI rose sharply to 53.2 in February from 49.7 in January, crossing above the 50-point threshold that signals expansion. The rebound indicates a solid improvement in overall business conditions after a brief contraction at the start of the year.

The survey, compiled by S&P Global Market Intelligence, showed renewed momentum in output, stronger customer demand and a significant cooling in price pressures, supported by currency appreciation.

New orders expanded markedly in February, reversing January’s dip, as firms reported improved customer demand and better product affordability. Output growth accelerated to its fastest pace in four months, with all four monitored sectors recording expansion. Wholesale and retail, which contracted in January, returned to growth.

Employment rose for the ninth consecutive month, with firms increasing staffing levels at the fastest pace since October 2025 in response to rising workloads. However, backlogs of work accumulated at the sharpest rate since May 2020, reflecting delayed client payments, staff shortages, material supply challenges and intermittent power supply.

Purchasing activity also increased for the 15th straight month, while inventories expanded at the strongest pace in three months as companies positioned to meet growing demand. Suppliers’ delivery times improved further, aided by prompt payments and better traffic conditions.

A key highlight of the February report was the marked slowdown in inflation.

Purchase price inflation eased to its weakest level in just over six years, while output price inflation slowed to its lowest point since January 2020. Firms attributed the moderation to naira appreciation and softer cost pressures, although some businesses still reported higher prices for raw materials and animal feed.

Staff costs continued to rise due to cost-of-living adjustments, but the pace of increase was modest compared to previous months.

Head of Equity Research, West Africa at Stanbic IBTC Bank, Muyiwa Oni, said the rebound aligns with improving macroeconomic fundamentals.

He noted that currency stability, with the naira trading below N1,400/$ since late January, alongside stronger external accounts and improved foreign exchange flows, has helped moderate input costs.

Stanbic IBTC projects Nigeria’s economy to grow by 3.86 per cent year-on-year in Q1 2026, with full-year growth forecast at 4.1 per cent in 2026.

According to the bank, increased infrastructure spending, livestock development initiatives, easing trade constraints and fresh investments in oil and gas as well as manufacturing are expected to broaden growth drivers this year.

The forward-linkage impact of the Dangote Refinery is also expected to support industrial and related sectors, while lower inflation and potential interest rate cuts could boost private consumption and business investment.

Business confidence improved in February, though sentiment remained relatively muted. Over 53 per cent of surveyed firms expect output to increase over the next 12 months, citing advertising drives and expansion plans as key growth strategies.

With inflation cooling and demand recovering, February’s PMI data suggest Nigeria’s private sector may be entering a more stable growth phase after navigating months of reform-induced volatility.