By Favour Pius
Nigeria’s private sector slipped into contraction for the first time in 16 months, as the Purchasing Managers’ Index (PMI) fell below the 50-point threshold, signalling a slowdown in business activity, according to a new report.
The latest survey by Stanbic IBTC Bank showed that the headline PMI dropped beneath the neutral 50.0 level, indicating a deterioration in operating conditions across the economy after more than a year of sustained expansion.
Analysts said the decline reflects mounting pressures on businesses, including high inflation, weak consumer demand, rising input costs, and foreign exchange constraints.
A PMI reading below 50.0 typically signals contraction, while a figure above that level indicates expansion.
The report noted that output and new orders declined during the period, as firms grappled with reduced purchasing power among consumers and elevated operating expenses.
Businesses also reported slower hiring activity, with some companies scaling back expansion plans amid uncertainty in the macroeconomic environment.
“The downturn highlights the strain on private sector activity, driven largely by cost pressures and subdued demand,” the report stated.
Despite the contraction, some firms maintained cautious optimism, citing expectations of improved conditions if inflation moderates and foreign exchange availability improves.
Economic experts warned that the return to contraction could have implications for growth momentum, particularly if the trend persists over subsequent months.
They stressed the need for policy measures to stabilise prices, ease supply-side constraints, and support business confidence.
The development comes at a time when Nigeria’s economy is navigating multiple headwinds, including currency volatility, energy costs, and structural bottlenecks affecting production and distribution.
Stakeholders say restoring growth in the private sector will depend on coordinated fiscal and monetary interventions aimed at improving liquidity, boosting consumer spending, and strengthening the overall business environment.
