By Boluwatife Oshadiya | March 2, 2026
Key Points
- Nigeria’s headline PMI falls to 49.7 in January from 53.5 in December
- New orders stagnate after 14 consecutive months of growth
- Output prices rise at fastest pace in four months amid higher input costs
Main Story
Nigeria’s private sector activity deteriorated in January, with the headline Purchasing Managers’ Index (PMI) falling below the 50-point no-change threshold for the first time since the survey began in 2014, according to Stanbic IBTC’s latest report compiled by S&P Global.
The PMI declined sharply to 49.7 in January from 53.5 in December, signalling a contraction in business conditions at the start of 2026. A reading below 50 indicates a decline in activity, while a figure above 50 reflects expansion.
The report attributed the downturn primarily to stagnating new orders, which ended a 14-month sequence of growth. While some firms reported higher customer numbers, others cited weak demand typical of post-festive spending slowdowns, resulting in flat overall order volumes.
Output increased only marginally during the month, with weakness concentrated in the wholesale and retail sector. Agriculture, manufacturing, and services continued to record expansion, albeit at slower rates.
Despite weaker demand, employment levels continued to rise for the eighth consecutive month. Companies increased staffing at a pace broadly similar to December, enabling them to reduce backlogs of work for the first time in three months and to the greatest extent since March 2025.
Purchase prices rose sharply, reaching a three-month high amid widespread reports of higher raw material costs. Staff costs also increased at the fastest rate since July last year, as companies raised wages to help employees cope with elevated living expenses. Output prices climbed at a four-month high as firms passed rising input costs to customers.
“After 13 months of consecutive readings above the 50-point no change mark, Nigeria’s private sector activity deteriorated to 49.7 points in January from 53.5 in December,” Muyiwa Oni, Head of Equity Research, West Africa, Stanbic IBTC Bank, said.
He attributed the slowdown to typical seasonal demand weakness following December’s festive-induced spending.
“Nonetheless, this is the first time in the history of the PMI survey that January headline PMI will be below the 50-point psychological threshold, thereby likely signaling deeper issues aside from the quiet activity that usually occurs in January,” Oni added.
What’s Being Said
Oni noted that while wholesale and retail activity fell deeply below the growth threshold on a seasonally adjusted basis, agriculture, services, and manufacturing remained above 50.0 points.
“Despite the negative surprise in the PMI numbers in January, we still see the Nigerian economy growing by 4.1% year-on-year in 2026 as we expect demand to pick up in subsequent months,” he said.
He added that infrastructure investment, livestock development initiatives, easing trade constraints, and continued forward linkages from the Dangote refinery could support broader economic expansion. Potentially lower interest rates, declining inflation, and exchange rate stabilisation were also cited as supportive factors for private consumption and business investment.
What’s Next
- Analysts will monitor February PMI data for signs of recovery or deeper contraction
- The Central Bank’s next monetary policy meeting may consider inflation and private sector trends
- Investors are watching whether wholesale and retail demand rebounds in the second quarter
The Bottom Line: January’s sub-50 PMI reading signals a rare contraction in Nigeria’s private sector at the start of the year, breaking a 13-month expansion streak. While analysts argue seasonal weakness may explain part of the slowdown, the historic dip below the threshold raises questions about underlying demand resilience in early 2026.
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