Strengthening domestic demand boosts new factory orders worldwide

…As Nigeria’s private sector grows

GLOBAL manufacturing activity has gained momentum as stronger domestic demand fuels a surge in new factory orders worldwide. This is according to the latest data from Global Manufacturing Index data which reveals a resurgence in manufacturing, driven by increased consumer spending and business investment in key economies.

This uptick provides a welcome boost to the sector, despite lingering economic uncertainties.

In February 2025, the global manufacturing sector extended its recovery for the second consecutive month. The Global Manufacturing Purchasing Managers’ Index (PMI) rose to 50.6 from 50.1 in January, signaling improved operating conditions, though growth remains moderate by historical standards.

The expansion was led by a sharp rebound in the United States, where production saw its steepest monthly increase since May 2022. This marked a significant turnaround after five months of decline at the end of last year. Among the 33 economies tracked by the S&P Global PMI survey, only India posted stronger growth than the US in February.

However, regional performance varied. The eurozone remained in contraction for the 23rd consecutive month, highlighting ongoing challenges in the region. Meanwhile, Asia recorded its strongest manufacturing output growth in six months, boosting the region’s economic outlook.

New factory orders worldwide increased at their fastest pace since March 2022, driven primarily by domestic demand. While global export orders declined slightly, the drop was the smallest in nine months, suggesting potential stabilization in global trade. However, rising input costs, particularly in North America, contributed to inflationary pressures. In contrast, selling prices remained stable in the eurozone and China, offering some relief to manufacturers.

On the domestic front, Nigeria’s private sector experienced significant growth in February 2025, supported by increased output, rising new orders, and higher purchasing activity. Stronger demand fueled this improvement, while inflationary pressures—though still high—showed signs of easing.

The headline Purchasing Managers’ Index (PMI) rose to 53.7 from 52.0 in January, marking its strongest expansion since January 2024 and the third consecutive month of growth. This reflects growing business confidence and a sustained economic recovery.

Output levels expanded for the third straight month, with February’s growth being the fastest in over a year. Businesses attributed this to higher sales and improving demand conditions. All major sectors—agriculture, manufacturing, services, and wholesale & retail—recorded growth, although the wholesale & retail sector saw only marginal gains.

New business orders surged to their highest level in over a year, as improved customer confidence led to greater project commitments. Additionally, inflationary pressures, which had been a major concern, showed further signs of easing.

While input cost inflation slowed to a ten-month low, businesses still faced rising raw material prices and record-high staff costs, which reached their highest level since March 2024. As a result, employment growth remained marginal, with firms adopting a cautious approach to workforce expansion.

Despite this, backlogs of work declined, indicating improved capacity management. While selling price inflation eased to a seven-month low, purchasing activity surged to its highest level since May 2023, as businesses took advantage of stabilizing costs to build inventories in anticipation of sustained demand.

Additionally, supply chain performance improved, with suppliers’ delivery times shortening at the fastest rate in seven months, driven by prompt payments and better logistics.

As domestic demand strengthens globally and Nigeria’s private sector expands, economic analysts anticipate continued growth in the coming months. However, challenges such as inflationary pressures, supply chain risks, and regional disparities in manufacturing recovery will require careful monitoring.

For Nigeria, the sustained increase in business confidence, new orders, and output growth indicates a positive trajectory, according to analysts from Cowry Assets Management.

If inflation continues to ease and demand remains strong, the private sector could play a pivotal role in driving broader economic stability and growth in 2025.

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