Report: Private Sector Records Marked Increases in Output, New Orders as Inflation Pressure Softens

Dike Onwuamaeze

The recovery in the Nigerian private sector gathered strength in March as output, new orders and employment increased to greater degrees than in February.

This was disclosed by the Stanbic IBTC Bank Nigeria Purchasing Managers’ Index (PMI) for March 2025, which stated that the recovery was helped to some extent by softening inflationary pressures, with input costs increasing at the slowest pace since May 2023.

The report said: “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. Moreover, 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.”

The report also said that the pace of output growth also quickened at the end of the opening quarter.

It said, “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.”

Commenting on the report, the Head of Equity Research West Africa at Stanbic IBTC Bank, Mr. Muyiwa Oni, said that waning inflationary pressures are helping to improve domestic demand conditions.

Oni said: “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 cnt y/y growth in the non-oil sector in Q1:25, signifying a further improvement in business conditions.

“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 y/y 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.”

The report stated that 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,” it said.

It also said that rising customer demand encouraged companies in Nigeria to expand their purchasing activity during March.

“Input buying increased for the fourth consecutive month. The rate of expansion was sharp, albeit slightly softer than that seen in February.  Nigerian companies recorded a sharp slowdown in the pace of overall input cost inflation at the end of the opening quarter. The latest rise was the slowest since May 2023, albeit still marked. All four sectors covered by the report saw a weaker pace of cost inflation during the month” it said.

The report also showed that rate of purchase cost inflation eased for the sixth successive month in March and was the weakest in just under two years.   The report noted that in line with the trend in input costs, the pace of output price inflation continued to soften in March, easing for the third successive month to the weakest since May 2023.