Stanbic IBTC Bank Nigeria PMI®: Output Growth Accelerates To Fastest In Just Over A Year
February data highlighted an improvement in growth momentum within Nigeria’s private sector. The acceleration in output, new orders, and purchasing activity was attributed to stronger demand and signs of moderating inflationary pressures. Despite the persistent increase in costs, some companies remained cautious about expanding their workforce, leading to only marginal employment growth.
The Stanbic IBTC Purchasing Managers’ Index™ (PMI®) is the key indicator utilized, with readings above 50.0 indicating an improvement in business conditions compared to the previous month. In February, the headline PMI rose to 53.7 from January’s 52.0, marking a robust monthly improvement in business conditions—the most significant movement since January 2024.
According to the survey, activity in Nigeria’s private sector improved for the third consecutive month. The PMI achieved its highest level since January 2024. A stable exchange rate and reduced fuel prices contributed to easing inflationary pressures, which in turn strengthened consumer demand. Consequently, new orders saw a continuous increase for the fourth month, as customers showed a greater inclination to invest in new projects.
In line with the surge in new orders, output experienced a sharp increase in February, with the output index rising to 56.9 from 53.7 in January. Input price inflation further eased, reaching its weakest level since April 2024. However, around 39.0% of respondents raised their output prices, with less than 1.0% lowering their charges.
Nigeria’s real GDP growth saw further improvement in Q4 2024, rising by 3.84% year-on-year, up from 3.46% in Q3 2024. This growth achieved the highest rate since Q4 2021. For 2024, full-year growth reached 3.40%, compared to 2.74% in 2023, driven by both the oil and non-oil sectors. Services remained a major contributor to GDP growth, accounting for 79.0% (as was the case in Q3 2024), followed by Agriculture at 11.9%, and Industries contributing the remaining 9.0%.
The non-oil sector of Nigeria is primed for further improvements in 2025, supported by foreign exchange stability and improved liquidity. This provides a boost to real sector activities, including manufacturing, trade, and real estate. In addition to anticipated reductions in borrowing costs, these factors are expected to drive non-oil sector growth by an estimated 3.4% year-on-year in 2025. Overall, the Nigerian economy is projected to grow by 3.5% year-on-year in 2025.
The private sector’s health has strengthened over three consecutive months. In February, output increased for the third month, reaching the fastest rate since January 2024. Respondents attributed this rise to higher sales amid improving demand. Significant expansions were observed in agriculture, manufacturing, services, and wholesale & retail sectors—though the latter saw only marginal growth. New orders also increased markedly, with customers more willing to invest in new projects.
These signs of strengthening demand came alongside moderating inflationary pressures. Input costs increased at the slowest rate in ten months, though inflation persisted due to higher raw material prices and rising staff costs, which saw the sharpest increase since March 2024. Cost pressures limited job creation, resulting in only a marginal rise in employment—the slowest in three months—despite substantial increases in output and new orders. Nevertheless, there was a reduction in backlogs of work.
In February, input price inflation corresponded to a sharp, yet seven-month-low output price increase. Employment growth was modest, but companies increased their input purchasing, achieving the fastest pace of growth since May 2023. Despite rising demand, suppliers’ delivery times shortened significantly over seven months due to prompt payments, resulting in speedy delivery of goods. Although companies remain optimistic about increased output in the next 12 months, sentiment in February was below average. Plans for business expansions, including new plant openings and increased export operations, underpinned this optimism.
