Business confidence in Nigeria remains strong despite a slight slowdown in growth, as the Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) records 52.0 in January 2025.
Although lower than December’s 52.7, the index stays above the 50.0 benchmark, signaling continued expansion in the private sector. The latest data shows that business activity and new orders increase for the second consecutive month, driven by rising customer demand and improved market conditions.
Optimism at a Record High
Business confidence reaches its highest level in over a decade, reflecting growing optimism about expansion plans and long-term economic stability. The PMI report states that any reading above 50.0 signals an improvement in business conditions compared to the previous month, while readings below 50.0 indicate a decline.
According to the report:
- Business activity expands as firms increase operations to meet higher demand.
- New orders rise, though at a slower pace than in December.
- Employment levels improve as businesses hire more workers for the second straight month.
- Inflationary pressures ease, with input costs and output prices rising more slowly.
- Inventory stockpiling reaches an 18-month high as companies secure supply chain stability.
Sectoral Trends and Economic Outlook
Three out of four monitored sectors experience growth, with wholesale and retail being the only exception. Companies also benefit from faster supplier deliveries due to improved vendor relationships and more efficient payment cycles.
While inflation remains a concern, January sees the slowest increase in input prices since April 2024, with output charges rising at their weakest pace in six months. Analysts project further moderation in inflation throughout 2025, with an expected annual average of 30.5%, down from 33.18% in 2024.
Nigeria’s non-oil sector is forecasted to grow by 3.2% year-on-year in 2025, up from 3.0% in 2024. Key drivers include manufacturing, trade, ICT, and financial services, while agriculture is expected to face challenges due to security concerns and high production costs.
Business Sentiment and Market Trends
Muyiwa Oni, Head of Equity Research for West Africa at Stanbic IBTC Bank, highlights that while growth slightly slows, business sentiment remains positive.
“Nigeria’s private sector continues to expand, albeit at a slightly weaker pace than in December 2024. Business activity (53.7 in January vs. 54.8 in December) and new orders (52.6 in January vs. 53.2 in December) both improve, driven by stronger customer demand and increased investment in new projects. The rise in new orders prompts businesses to expand their workforce for the second consecutive month,” Oni explains.
Implications for Businesses
The sustained PMI reading above 50.0 underscores resilience in Nigeria’s private sector despite economic challenges. Businesses continue to show confidence in the economy through steady expansion, increased hiring, and proactive inventory management.
Slower inflation growth provides a more predictable cost environment, enabling businesses to manage expenses and set competitive prices without frequent price hikes. This benefits manufacturers, traders, and service providers who depend on stable supply chains and controlled input costs.
As consumer and corporate demand stabilizes, businesses gain more certainty for long-term investments and expansion strategies. The continued rise in employment levels indicates that companies are not only experiencing increased demand but are also preparing for future growth opportunities.
Despite ongoing challenges in certain sectors like agriculture, firms that focus on efficiency, innovation, and customer engagement position themselves well to benefit from the improving business environment in 2025.