By: ThinkBusiness Africa
For the first time in the history of the Purchasing Managers’ Index (PMI) survey, Nigeria’s private sector began the year in contraction territory, ending a 13-month streak of consecutive growth. The headline PMI fell to 49.7 in January 2026, down sharply from 53.5 in December 2025, according to the latest Stanbic IBTC PMI report.
This drop below the 50.0 “no-change” threshold signals a slight deterioration in business conditions, a phenomenon not seen in a January report since the survey’s inception in 2014.
The downturn was primarily driven by a “broad stagnation” of new orders, which halted a 14-month sequence of continuous growth. Business analysts attribute this to a typical post-festive demand weakness that often follows high spending in December.
While sectors like agriculture, manufacturing, and services managed to record marginal growth, the wholesale and retail sector bore the brunt of the slowdown, falling significantly below the growth threshold.
Despite the cooling of demand, Nigerian companies faced rising costs: Output price inflation hit a four-month high as firms passed on higher purchase costs to consumers.
According to the survey, wages rose at the fastest pace since July 2025, with businesses reporting they increased pay to help employees navigate higher living costs. Input prices surged to a three-month high due to more expensive raw materials.
Despite the muted start to the year, the employment landscape remained resilient. Staffing levels increased for the eighth consecutive month, maintaining a pace similar to the end of 2025. This continued hiring, combined with stable new orders, allowed many companies to clear their backlogs of work at the fastest rate since March 2025.
Business confidence took a slight dip in January, yet Nigerian firms remain largely optimistic about the year ahead, citing plans for expansion and hopes for a recovery in new orders.
“Despite the negative surprise in the PMI numbers in January, we still see the Nigerian economy growing by 4.1% y/y in 2026,” said Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank.
Analysts expect demand to pick up as government investments in infrastructure and the forward-linkage impact of the Dangote refinery take root in the coming months.
