The private sector in Nigeria showed better growth momentum in February, according to data. As demand increased and inflationary pressures began to ease, rates of growth in output, new orders, and purchasing activity all accelerated.
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Nevertheless, several businesses were hesitant to hire more employees due to the steep cost increases, and employment only slightly increased. The Stanbic IBTC Purchasing Managers’ IndexTM (PMI®) is the survey’s headline figure. A rating above 50.0 indicates that business circumstances have improved from the previous month, while a reading below 50.0 indicates that things have become worse. The headline PMI increased from 52.0 in January to 53.7 in February, indicating a strong monthly improvement in business conditions.
This advance was the biggest since January 2024. “With the latest PMI reading of 53.7 points in February, activity in Nigeria’s private sector improved for the third consecutive month, reaching its highest level since January 2024 (54.5 points),” said Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank. Moderation in fuel prices and a comparatively steady exchange rate are contributing to the reduction of inflationary pressures, which in turn strengthened consumer demand during the month.
As a result, new orders rose for the fourth consecutive month, and survey respondents reported that clients were more eager to commit to new projects. As the output index settled at 56.9 points from 53.7 points in January, output also rose significantly in February in tandem with the rise in new orders. In February, however, input price inflation decreased even more to its lowest level since April 2024.
Less than 1.0% of respondents reduced their charges during the month, whereas around 39.0% raised their production pricing. In Q4:24, Nigeria’s real GDP growth improved even further, increasing by 3.84% year over year from 3.46% in Q3:24. Since Q4:21, when the GDP grew by 3.98% year over year in real terms, Q4:24 growth was the strongest. Q4:24 With the help of both the oil and non-oil sectors, 2024 full-year growth has increased from 2.74% in 2023 to 3.40% in Q4 today.
With a 79.0% contribution to the nation’s GDP growth in Q4:24 (as in Q3:24), services continue to lead the field. Agriculture comes in second with an 11.9% contribution, while industries make up the remaining 9.0% of the real GDP growth during the review quarter. “The Nigerian economy’s non-oil sector is now expected to grow even more in 2025 as the real sector’s operations, such as manufacturing, trade, and real estate, are encouraged by the continued foreign exchange stability and increased foreign exchange liquidity.
This could help the non-oil sector develop in 2025, especially when combined with the expected decrease in borrowing rates. In light of this, we forecast that the non-oil sector would expand by 3.4% year over year in 2025. As a result, we continue to project that the Nigerian economy will expand by 3.5% year over year in real terms in 2025, with the Q1:25 growth print expected to settle at 3.55% year over year. For the third straight month, the private sector’s health has improved.
In February, output rose for the third consecutive month. Additionally, the most recent expansion was the fastest and most pronounced since January 2024. In an increasing demand environment, respondents attributed the increase in activity to higher sales. Agriculture, manufacturing, services, and wholesale and retail all had increases in output, albeit the last two saw only slight increases.
Additionally, new orders grew significantly, with the most recent increase being the largest in just over a year. According to reports, customers were more eager to commit to new initiatives. Moderate price pressures were accompanied by indications of improving demand. Although the rate of inflation remained high due to rising raw material prices and a staff cost increase that was the most since March 2024, overall input costs climbed at the slowest rate in ten months. In actuality, the rate of job creation in February was constrained by cost concerns.
Despite significant increases in productivity and new orders, employment increased just little and at the slowest rate in three months. Despite this, work backlogs decreased. The rate of output price inflation remained high in February but decreased to a seven-month low, which is consistent with the input cost picture. Companies increased their input purchases throughout the month, causing the growth rate to be the steepest since May 2023, even though employment increased only slightly.
Purchase stocks grew more quickly as well. supply times for suppliers decreased the most in seven months despite an increase in input demand because timely payments facilitated the rapid supply of goods.
