Nigerian Private Sector Posts Fastest Output Growth After 53.7 PMI in February

This information was revealed by Stanbic IBTC Bank in its PMI report made available to Business Post on Monday. The sector also posted its fastest output growth in just over a year.

Rates of expansion in output, new orders and purchasing activity all quickened as demand picked up and inflationary pressures showed signs of moderating. That said, with costs continuing to rise sharply, some companies were reluctant to hire additional staff and employment increased only marginally.

“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 at 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. Thus, new orders increased for the fourth consecutive month, with survey participants noting a greater desire on the part of customers to commit to new projects.

“In line with the increase in new orders, output also increased sharply in February as the output index settled at 56.9 points from 53.7 points in January.

“That said, input price inflation eased further in February to its weakest level since April 2024. However, about 39.0% of respondents increased their output prices in the month, with less than 1.0% lowering their charges,” the Head of Equity Research West Africa at Stanbic IBTC Bank, Mr Muyiwa Oni, commented.

“Nigeria’s real GDP growth improved further in Q4:24, rising by 3.84% y/y, from 3.46% y/y in Q3:24. Growth in Q4:24 was the highest since Q4:21 when this economy grew by 3.98% y/y in real terms. Q4:24 GDP now brings 2024 full-year growth to 3.40%, from 2.74% in 2023, supported by both the oil and the non-oil sectors.

“In terms of contributions to the overall GDP growth in Q4:24, Services continue to dominate with a 79.0% contribution to the country’s GDP growth (same as Q3:24), followed by Agriculture with an 11.9% contribution while Industries contributed the remaining 9.0% of the real GDP growth in the review quarter.

“The non-oil sector of the Nigerian economy is now poised to improve further in 2025 as the lingering FX stability and improved FX liquidity bodes 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 3.55% y/y,” he added.

The health of the private sector has now strengthened in three consecutive months. Output increased for the third month running in February. Moreover, the latest expansion was sharp and the fastest since January 2024.