Private sector job growth sustained for fourth month

The private sector increased employment again in March, marking the fourth month running in which this has been the case.

This was disclosed in the Stanbic IBTC Bank Nigeria Purchasing Managers’ Index made available to The PUNCH on Wednesday, which showed that, although slight, the pace of job creation quickened to the fastest since August 2024.

The PMI report revealed that several firms reported hiring staff on a contract basis, and all monitored sectors (agriculture, mining, manufacturing, construction, wholesale, retail and services) saw employment rise, with manufacturing seeing the sharpest expansion.

“Nigerian companies increased employment again in March, the fourth month running in which this has been the case. Although slight, the pace of job creation quickened to the fastest since August 2024. A number of firms reported hiring staff on a contract basis. All four monitored sectors saw employment rise, with manufacturing seeing the sharpest expansion. Rising workforce numbers helped companies to deplete outstanding business in March despite a sharper rise in new orders. Backlogs of work have now decreased in ten consecutive months, with some firms reporting that all outstanding business had been completed,” read part of the report.

Generally, the recovery in the Nigerian private sector gathered strength in March, with output, new orders and employment all increasing to greater degrees than in February. The positive outlook in the sector was hinged on the deceleration of inflation, with input costs increasing at the slowest pace since May 2023.

Compared to Q1 2024, the PMI said that private sector activity in Q1:25 was at a much better position compared to the preceding quarter, and this is consistent with a likely 3.9 per cent year-on-year growth in the non-oil sector in Q1:25, signifying a further improvement in business conditions.

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.

It was indicated that the latest 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. This helped lead to a fifth successive monthly expansion of new orders in March. 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.

“Increases in new orders and output requirements encouraged companies to expand their staffing levels and purchasing activity accordingly. A modest rise in employment was nonetheless the most marked in seven months, while input buying was up sharply. Higher purchasing activity fed through to rising stocks of inputs, with companies looking to build inventories in line with current and future business needs. Some firms also took advantage of softer price inflation to stockpile inputs,” read the report.

It was added that although rates of expansion in output and new orders quickened in March, companies were less optimistic regarding the 12-month outlook for business activity as confidence was at a three-month low and weaker than the series average. The firms that predicted a rise in output linked this to planned advertising, business investment and the opening of new branches.

Commenting on the report, the Head of Equity Research West Africa at Stanbic IBTC Bank, Muyiwa Oni, said, “So, the rising 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 print since January 2024 (54.5 points). Central to this improvement is an increase in customer requests, which ensured the rate of growth in new orders in March quickened to pace in months. In addition, the employment level increased for the fourth month running in March, although some firms reported hiring staff on a contract basis.

“Meanwhile, the pace of increased input costs for the Nigerian companies moderated sharply in March, with the latest rise being the slowest since May 2023, albeit still marked. In line with this, the pace of output price inflation has weakened further for the third successive month to the weakest since May 2023. Nonetheless, staff costs continued to rise at a solid pace, and companies generally linked the efforts to increase staff pay to help workers deal with higher living costs,” he explained.

Projecting, Oni added that for the full year 2025, “the non-oil sector is poised to improve further compared to 2024 as the lingering 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 per cent year-on-year in 2025. Therefore, we still expect the Nigerian economy to grow by 3.5 per cent y/y in real terms in 2025, with the Q1:25 growth print forecasted to settle at 3.7 per cent y/y.”