Nigeria’s private sector activity slipped into contraction at the start of 2026, as the Stanbic IBTC Bank Nigeria Purchasing Managers’ Index fell to 49.7 in January, down from 53.5 in December 2025, according to the PMI report published on Monday.
The PMI reading fell below the 50.0 no-change threshold, signalling a deterioration in business conditions compared with the previous month.
The index is compiled by S&P Global and endorsed and adopted by the National Bureau of Statistics
The report noted that January 2026 represents the first time since the PMI survey began in 2014 that the January reading has fallen below the 50-point threshold
The report read, “The headline figure derived from the survey is the Purchasing Managers’ Index™ (PMI®). Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.
“The headline PMI dipped to 49.7 in January, well down from December’s reading of 53.5 and ticking below the 50.0 no-change mark. Nevertheless, by posting close to the neutral threshold, the latest figure signalled broadly stable business conditions at the start of the year”
The decline in the headline PMI reflected a broad stagnation in new orders, ending a 14-month sequence of growth.
While some firms reported an increase in customer numbers, others cited weak demand, resulting in little overall change in new business volumes during the month.
Output also rose only marginally in January, in line with the subdued demand conditions.
Sector data showed that weakness was concentrated in wholesale and retail, which recorded contraction on a seasonally adjusted basis.
By contrast, agriculture, manufacturing, and services continued to record growth during the month, remaining above the 50-point expansion threshold.
Purchasing activity and stocks of inputs increased at much slower rates than in December, reflecting the slowdown in new orders.
Despite weaker demand, employment continued to rise in January, extending the current sequence of job growth to eight consecutive months.
The rate of job creation remained slight, broadly in line with the pace recorded in December.
With employment rising and new orders broadly stable, companies were able to reduce their backlogs of work for the first time in three months, and to the largest extent since March 2025.
As a result, input price inflation rose to a three-month high.
Staff costs also increased, recording the fastest pace of growth since July 2025, as firms reported raising wages to motivate workers and help offset higher living costs.
These pressures fed through into selling prices, with output price inflation rising to a four-month high. However, S&P Global noted that the pace of selling price inflation remained among the weakest recorded since the COVID-19 pandemic.
Business sentiment weakened during the month, although firms continued to express optimism that output would rise over the coming year. Positive sentiment was linked to planned expansions, higher stock holdings, and expectations of increased new orders.
Commenting on the data, Muyiwa Oni, Head of Equity Research, West Africa at Stanbic IBTC Bank, said the January PMI reading marked a notable shift in private sector conditions.
“After 13 months of consecutive readings above the 50-point no-change mark, Nigeria’s private sector activity deteriorated to 49.7 points in January from 53.5 in December,” Oni said.
He added that the slowdown was more pronounced in wholesale and retail, while agriculture, services, and manufacturing recorded growth.
