Stanbic IBTC Bank Nigeria has reported that Nigeria’s private sector activity slipped into contraction territory at the start of 2026 with the country recording its first-ever January Purchasing Managers’ Index (PMI) reading below 50 since the survey began in 2014.
Data from the Stanbic IBTC Bank Nigeria PMI, compiled by S&P Global, showed the headline index fell to 49.7 in January, down sharply from 53.5 in December.
The January reading marked a clear break from historical patterns. While business activity often softens at the start of the year following festive-season spending, this is the first time the PMI has dropped below the 50-point threshold in January, raising questions about the depth of the slowdown beyond seasonal effects.
Survey responses pointed to stagnant new orders, bringing an end to a 14-month growth run. Firms reported that while some customer segments remained active, broader demand was subdued, leaving overall order volumes largely unchanged.
As a result, output growth slowed significantly, rising only marginally compared with the stronger expansion recorded at the end of 2025.
Sector-level data revealed that weakness was concentrated in wholesale and retail trade, reflecting softer consumer-facing activity.
In contrast, agriculture, manufacturing, and services continued to post growth, helping to keep the headline PMI close to neutral and suggesting that the slowdown was uneven rather than economy-wide.
Cost pressures intensified during the month. Companies reported faster increases in input prices and staff costs, with wages adjusted to support workers facing higher living expenses.
Many firms passed these higher costs through to customers, pushing output price inflation to a four-month high, although price pressures remained relatively subdued compared with levels seen earlier in the post-pandemic period.
Employment was a notable bright spot. Staffing levels continued to rise at a pace broadly in line with late-2025 trends, indicating that firms remain cautious but not pessimistic about underlying demand. Purchasing activity and inventory accumulation, however, slowed alongside the stagnation in new orders.
Commenting on the data, Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank, said the January outcome may point to more than the typical early-year slowdown, noting that this is the first January contraction reading in the survey’s history.
He added that weakness was most pronounced in trade-related sectors, while productive sectors continued to expand.
Despite the softer start to the year, Stanbic IBTC Bank maintained its 4.1 percent GDP growth forecast for 2026, citing expectations of a demand recovery in subsequent months.
The outlook is supported by ongoing government infrastructure activity, efforts to ease trade constraints, investments in oil and gas and manufacturing, and the anticipated spillover effects from the Dangote Refinery across the wider economy.
Lower interest rates, supported by easing inflation and exchange-rate stabilisation, are also expected to improve private consumption and business investment as the year progresses.
For now, however, the January PMI reading signals a cautious opening to 2026, with businesses navigating a period of softer demand even as confidence in the medium-term outlook remains intact.
