THE relative stability in the foreign exchange (FX) rate and moderation in petrol prices boosted the Nigerian private sector businesses for the third consecutive month in February.
The improvement, analysts believe, supports the ease in inflationary pressures and helps to strengthen consumer demand in the month.
In its Purchasing Managers’ Index (PMI) report released on Monday, March 3, Stanbic IBTC Bank showed that Nigeria’s private sector businesses improved by 1.7 points compared to the previous reading.
It shows that headline PMI rose to 53.7 in February from 52.0 in January, signalling a solid monthly improvement in business conditions, and one that was the most pronounced since January 2024.
According to Stanbic IBTC, a reading above 50.0 signals an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.
It indicates that the health of the private sector has now strengthened in three consecutive months, and output increased for the third month running in February.
It pointed out that the rates of expansion in output, new orders and purchasing activity all quickened as demand picked up and inflationary pressures showed signs of moderating.
It said, however, that with costs continuing to rise sharply, some companies were reluctant to hire additional staff and employment increased only marginally.
It noted that the latest expansion was sharp and the fastest since January 2024.
“Respondents linked the rise in activity to higher sales amid an improving demand environment.
“Output was up in agriculture, manufacturing, services and wholesale and retail, although in wholesale and retail the rise was only fractional,” Stanbic IBTC stated.
It said the signs of strengthening demand coincided with moderating inflationary pressures as overall input costs increased at the slowest pace in 10 months.
Although the pace of inflation remained elevated amid higher prices for raw materials and a rise in staff costs that was the sharpest since March 2024, the report pointed out.
It added that companies were optimistic that output would increase further over the next 12 months on plans to expand businesses through the opening of new plants and increased export operations, among other supporting factors.
Commenting, the head of equity research West Africa at Stanbic IBTC Bank, Muyiwa Oni, said, “Activity in Nigeria’s private sector improved for the third consecutive month with the latest PMI reading of 53.7 points in February at its highest level since January 2024 (54.5 points).
“A relatively stable exchange rate and moderation in fuel prices are supporting the ease in inflationary pressures, which in turn helped strengthen consumer demand in the month.”
The Nigerian gross domestic product (GDP) improved in the fourth quarter of 2024 and the non-oil sector of the economy is poised to improve further in 2025 as the lingering FX stability and improved FX liquidity bodes well for the real sector activities, including manufacturing.
Oni added that this, in addition to the anticipated reduction in borrowing costs, should further support the growth of the non-oil sector in 2025.
The National Bureau of Statistics (NBS), following the rebasing of the country’s economy, put Nigeria’s headline inflation rate to have declined sharply to 24.48 per cent in January from 34.80 per cent in December 2024.
Also, the Central Bank of Nigeria (CBN), at the end of its 2-day monetary policy committee meeting, retained the benchmark interest rate at 27.5 per cent and held all other parameters.
The CBN governor, Olayemi Cardoso, attributed this to improved macroeconomic developments, which he believes are expected to positively impact price dynamics in the near to medium term.
These include the stability in the foreign exchange market with the resultant appreciation of the exchange rate and the gradual moderation in the price of petrol, The ICIR reported.