THE recovery in the Nigerian private sector gathered strength in March, with output, new orders and employment increasing to greater degrees than in February, the latest Purchasing Managers’ Index (PMI) report has shown.

It is the highest growth the sector has witnessed since January 2024 when the PMI recorded 54.5 points.

According to the monthly statistics from Stanbic IBTC Bank, the headline PMI posted 54.3 in March, up from 53.7 in February and above the 50.0 no-change mark for the fourth consecutive month.

A reading above 50.0 signals an improvement in business conditions and below 50.0, a deterioration.

The improvement in business conditions in the private sector was solid and the most marked since the start of 2024.

Central to the latest strengthening in the health of the private sector was an improving demand climate, the report pointed out, which led to a fifth successive monthly expansion in the review month.

The report indicated that firms were helped to some extent by softening inflationary pressures, with input costs increasing at the slowest pace since May 2023.

“Moreover, the pace of increase was sharp and the fastest in 14 months. In turn, the pace of output growth also quickened at the end of the opening quarter.

“Here too, the latest rise was the sharpest since January 2024. Output expanded across all four sectors covered by the report,” it stated.

According to the report, increases witnessed in new orders and output encouraged companies to expand their staffing levels and purchasing activities even as employment showed a modest rise in seven months.

While firms took advantage of softer price inflation to stockpile inputs, overall input costs continued to rise sharply.

The latest data from the National Bureau of Statistics (NBS) shows the pace of inflation eased for the fifth month running and was the slowest since May 2023.

It also indicates inflation figures dropped for the two consecutive months owing to the rebasing of the economy.

The ICIR reported headline inflation declined for the second consecutive time to 23.18 per cent in February, having fallen sharply from 34.80 per cent in December 2024 to 24.48 per cent in January.

The Stanbic IBTC report further shows that while the rates of expansion in output and new orders quickened in March, companies were less optimistic regarding the 12-month outlook for business activity, stressing that business confidence was at a three-month low.

“Softening inflationary pressures are helping to improve domestic demand conditions, in turn, supporting an overall improvement in private sector activity in Nigeria.

“Consequently, private sector activity strengthened for the fourth consecutive month, with the headline PMI settling higher at 54.3 points in March from 53.7 points in February – its highest since January 2024 (54.5 points),” the bank’s head of Equity Research West, Muyiwa Oni, commented.

Central to the improvement was an increase in customer requests, which ensured the rate of growth in new orders in March quickened to its fastest pace in 14 months, he stressed.

In line with this, the pace of output price inflation softened further – easing for the third successive month to the weakest since May 2023, Oni said.

He noted that private sector activity in first quarter of this year was at a much better position, which is consistent with a likely 3.9 per cent year-on-year growth in the non-oil sector, signifying a further improvement in business conditions compared to the fourth quarter of 2024.

For 2025, the non-oil sector is poised to improve further compared to 2024 as the lingering foreign exchange (FX) stability and improved FX liquidity conditions bode well for the real sector activities, including manufacturing, trade and real estate.

“This, in addition to the anticipated reduction in borrowing costs, should further support the growth of the non-oil sector in 2025.

“Accordingly, we project the non-oil sector to grow by 3.4% y/y in 2025. Therefore, we still expect the Nigerian economy to grow by 3.5% y/y in real terms in 2025 with the Q1:25 growth print forecasted to settle at 3.7% y/y,” Oni maintained.