THE Nigerian private sector sustained growth in business activity to start the year despite a surge in inflationary pressure.
The Stanbic IBTC Bank said in its latest monthly Purchasing Managers’ Index (PMI) data released on Monday, February 3.
Headline PMI posted 52.0 in January, down from 52.7 in December but still above the 50.0 no-change mark indicating confidence in private business activity.
A PMI reading above 50.0 points signals an improvement in business conditions, while below 50.0 shows a deterioration.
The sustained growth came after private sector businesses contracted for five consecutive months, from July to November 2024.
Stanbic IBTC’s latest data also indicates that the nascent growth in the Nigerian private sector seen at the end of December 2024 was sustained into the first month of 2025, with new orders and business activity continuing to rise.
“Moreover, there was a large improvement in business confidence while firms expanded employment, purchasing and inventories,” it stated.
It pointed out that input costs and output prices continued to rise rapidly, but respective rates of inflation were much slower than seen in December.
The January PMI points, therefore, signalled a second successive monthly improvement in the health of the Nigerian private sector after having returned to growth in December, but the rate of expansion eased from the previous month.
According to the Stanbic IBTC data, the uplift in sentiment seen at the start of the year was the largest since the survey began just over 11 years ago.
It attributed this to signs of inflationary pressures softening in January, which the National Bureau of Statistics monthly report expected to be released in the middle of this could justify.
The ICIR can report that Nigeria’s inflation currently stood at 34.8 per cent in December, having risen from 34.6 per cent in November.
The PMI data noted that efforts to satisfy customer requirements on time led companies to, among other things, expand their purchasing activity and inventory holdings at the start of the year.
Over the weekend, the newly elected chairman of the Organised Private Sector of Nigeria, Dele Oye, called for a united and inclusive private sector to drive sustainable economic growth to address the pressing issues facing private sector businesses.
Commenting on the data, the head of equity research in West Africa at Stanbic IBTC Bank, Muyiwa Oni, said, “Nigeria’s private sector activity sustained its improvement in January 2025, albeit lower than levels seen in December 2024.”
He noted that headline inflation averaged 33.18 per cent year-on-year in 2024 from an average of 24.52 per cent in 2023.
He said this was driven mostly by foreign exchange depreciation, renewed petrol price increases in line with full petrol price liberalisation, structurally low food supplies exacerbated by high extreme weather conditions, and increased food demand, especially during the festive season.
“We expect a moderation in the inflation rate in 2025 although the pace of the moderation is only likely to be faster in late Q3:25.
“Notably, we expect headline inflation to average 30.5% y/y in 2025 and end the year at 27.1% y/y,” Oni said.
He said the bank projects the non-oil sector to grow by 3.2 per cent in 2025 from an estimated 3.0 per cent year-on-year in 2024.
The growth is also likely to pick up across manufacturing and trade, while ICT finance and insurance should continue to play a big role in economic performance.
However, Oni said the agriculture sector would likely still lag its long-term average amid lingering internal security challenges, high input costs, and extreme weather conditions.
“Within the manufacturing sector, cement, food and chemicals, and pharmaceutical products are key sub-sectors that have been exceeding the manufacturing sector’s growth since Q4:22,” he added.