Private Sector Returns To Growth As PMI Rises to 53.2 in February

Nigeria’s private sector rebounded into expansion territory in February 2026, as the Stanbic IBTC Bank Purchasing Managers’ Index climbed to 53.2 from 49.7 recorded in January, signalling renewed improvement in business conditions after a brief contraction at the start of the year.

The latest PMI reading, compiled by S&P Global and endorsed by the National Bureau of Statistics, points to a solid recovery in private-sector health, with firms reporting stronger demand, rising output, and easing inflationary pressures.

The PMI is a diffusion index where a reading above 50 indicates improvement in business conditions compared to the previous month, while a reading below 50 signals deterioration.

According to the report, “After dipping below the 50.0 no change mark in January, the headline PMI recovered from the reading of 49.7 to 53.2 in February. As such, the latest data pointed to a solid monthly improvement in the health of the private sector. Except for January’s blip, business conditions have improved continuously since December 2024.”

The rebound was largely driven by a renewed expansion in new orders, underpinned by stronger customer demand and improved product affordability. Surveyed firms cited higher customer numbers and the introduction of new products as key factors supporting the uptick in activity.

Output rose at the fastest pace in four months, reflecting the broad-based nature of the recovery. All four monitored sectors recorded growth in February, with wholesale and retail businesses returning to expansion after contracting in January.

Employment levels also strengthened for the ninth consecutive month. Staffing levels increased at the fastest pace since October 2025, suggesting growing confidence among firms about near term business prospects.

However, despite sustained hiring, backlogs of work rose at the sharpest rate since May 2020. Companies attributed the buildup to delayed client payments, material and staff shortages, and persistent power supply challenges.

To meet higher order volumes, firms expanded purchasing activity and built up inventories markedly during the month. Suppliers’ delivery times shortened further, supported by prompt payments and improved traffic conditions.

Commenting on the development, Head of Equity Research West Africa at Stanbic IBTC Bank, Muyiwa Oni, said stronger customer demand had supported a resurgence in output and new orders. “Stronger customer demand supported higher new product offerings at competitive pricing, with output and new orders regaining momentum in February,” he noted.

Inflationary pressures also showed signs of easing during the month, helped by the naira’s appreciation. The local currency traded below N1,400 to the dollar since late January, buoyed by improved external accounts, stronger offshore foreign exchange inflows and better remittance flows, alongside Central Bank interventions to moderate volatility.

Purchase cost inflation slowed to its weakest level in more than 6 years, though some firms continued to report higher prices for animal feed and certain raw materials. Staff costs, however, continued to rise, partly reflecting cost-of-living adjustments.

With input cost pressures moderating, firms raised output prices at the slowest pace since January 2020, providing some relief to consumers and reinforcing expectations of a gradual easing in headline inflation.

Business sentiment improved in February, though it remained relatively subdued compared to historical trends. Companies linked their cautious optimism to planned advertising campaigns and expansion initiatives over the next 12 months.

Looking ahead, Stanbic IBTC projects Nigeria’s real gross domestic product to grow by 3.86 per cent year on year in the first quarter of 2026 and 4.1 per cent for the full year. The bank expects growth to be supported by infrastructure spending, livestock development initiatives, easing trade constraints, as well as increased investment in oil and gas and manufacturing. Forward linkages from the Dangote refinery are also anticipated to provide additional momentum to economic activity.