Nigerian Business Activity Slows as PMI Falls Below Expansion Level in January

Nigerian companies recorded a slow start to 2026 as business conditions remained broadly stable but lost momentum, according to the latest Stanbic IBTC Bank Nigeria Purchasing Managers Index released on Monday.

Data compiled by S and P Global showed that the headline PMI declined to 49.7 in January from 53.5 in December, falling below the 50 point benchmark that separates expansion from contraction and indicating a mild deterioration in overall business activity.

The slowdown was largely driven by a stagnation in new orders, ending a fourteen month period of sustained growth. While some firms reported an increase in customer numbers, weaker demand in other areas balanced this out, leaving overall new business levels largely unchanged.

As a result, output growth weakened significantly, with production rising only marginally during the month compared to the stronger expansion recorded at the end of 2025.

Sector performance showed that the weakness was most pronounced in wholesale and retail trade. In contrast, agriculture, manufacturing and services continued to record growth, helping to keep overall business conditions close to the neutral level. This suggests that while some segments struggled, the wider economy remained relatively stable.

Purchasing activity and input inventories grew at slower rates, reflecting subdued demand conditions. At the same time, companies faced rising cost pressures as purchase prices and staff expenses increased.

Many firms raised wages to support employees coping with higher living costs, while higher input costs were passed on to customers through increased selling prices. Consequently, output price inflation rose to its highest level in four months, although it remained among the weakest levels seen since the pandemic.

Employment levels continued to rise at a pace similar to late 2025, pointing to sustained confidence in medium term demand. Although business sentiment softened in January, firms remained optimistic about future output growth, supported by planned expansions, higher stock levels and expectations of stronger demand later in the year.

Stanbic IBTC Bank maintained its outlook that the Nigerian economy would grow in 2026, citing infrastructure spending, investment inflows and improving macroeconomic conditions as key drivers.