Report: Agriculture, Manufacturing, Services Grew as Output Declines in January

Dike Onwuamaeze

Growth was recorded in agriculture, manufacturing and service sectors even though the Nigerian private sector experienced a deterioration in productivity in January 2026, the Stanbic IBTC Bank Nigeria Purchasing Managers Index (PMI) report for January 2026 has revealed.

The report stated that economic activities deteriorated from 53.5 per cent recoded in December 2025 to 49.7.

It also reported that the pace of inflation ticked up to a three-month high during the month under review, which it attributed to higher raw material costs.

The PMI stated, “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.”

According to the PMI report, “Data showed that weakness at the start of the year was centred on wholesale and retail companies. Meanwhile, growth was recorded in agriculture, manufacturing and services.”

It said that Nigerian companies faced a muted start to 2026 with broad stagnation of new orders led to much slower rises in output and purchasing activity.    

“While some companies reported increased customer numbers, this was cancelled out by other firms that mentioned demand weakness, meaning that new orders stagnated following a 14-month sequence of growth. In turn, output rose only marginally,” the PMI reported.

It added, “Purchasing activity and stocks of inputs also increased at much slower rates than in December, in line with a stagnation of new orders. Purchase prices increased sharply in January amid widespread reports from panellists of higher raw material costs. The pace of inflation ticked up to a three-month high.

“The rate of output price inflation quickened to a four-month high amid widespread reports of higher purchase costs being passed through to customers. That said, the pace of inflation remained among the weakest since the COVID-19 pandemic.”

Commenting on the PMI report, the Head of Equity Research West Africa at Stanbic IBTC Bank, Mr. Muyiwa Oni, stated; “This is the first time in the history of the PMI survey (since 2014) that January headline PMI will be below the 50-point psychological threshold, thereby likely signaling deeper issue asides quiet activity that usually occurs in January after festive-induced improvements in December.

 “After 13 months of consecutive reading above the 50 point no-change mark, Nigeria’s private sector activity deteriorated to 49.7 points in January from 53.5 in December. This is as new orders stagnated following a 14-month sequence of growth – likely linked to the weak demand that usually occurs in the start of the year after the festive-induced spending in December of the prior year.”

he added, “Historical data in the past six years also confirm this, where headline PMI in January was lower than December of the prior year except for January 2024.  Indeed, the weak business activity was more pronounced in the wholesale and retail which was deep below the 50-point growth threshold on a seasonally adjusted basis, while agriculture, services and manufacturing activity witnessed growth in the period as they were all above 50.0 points. Elsewhere, output prices increased markedly to a four-month high in January, with the companies linking this to higher purchase costs.”

In spite of the deterioration in January, Oni forecasted that the Nigerian economy would “grow by 4.1 per cent y/y in 2026 as we expect demand to pick up in subsequent months after the lull seen at the beginning of the year.

He said, “Notably, the government has been visible in infrastructure, livestock development, easing trade constraints, and attracting investments in oil and gas and manufacturing. Aside from that, the Dangote’s refinery is expected to continue to have forward-linkage impact on other sectors of the economy.  Additionally, likely lower interest rates in line with lower inflation and exchange rate stabilisation should support private consumption and business investments in 2026.

“Because of these factors, we see more sectors contributing to real GDP growth rate in 2026 compared to 2025, likely translating to an improvement in the quality of lives of the citizens compared to the last two years when the citizens witnessed the full negative impact of the government’s flagship reforms.”