The Nigerian private sector returned to growth in February, thereby reversing the muted start to 2026. Notably, a renewed expansion in new orders directly drove a faster increase in overall business activity.

Consequently, firms raised employment, expanded input buying, and built up inventories midway through the first quarter.

Meanwhile, an improvement in currency strength helped ease inflationary pressures, as both purchase costs and output prices rose at their slowest pace in just over six years. The headline figure derived from the survey is the Stanbic IBTC Purchasing Managers’ Index™ (PMI®).

Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank, stated clearly: “After the dip seen in January, Nigerian private sector returned to growth, with the headline PMI climbing to 53.2 points in February from 49.7 in January.

improvement aligned with stronger customer demand, which in turn encouraged firms to introduce new product offerings at competitive pricing. Accordingly, output (55.8 vs January: 50.2) regained momentum in February, while new orders (55.5 vs January: 49.9) also increased markedly during the month.

Importantly, the wholesale & retail sector, which had slipped in January, rebounded into growth, thereby ensuring that all four monitored sectors expanded in February.

Elsewhere, local currency appreciation supported softer input and output prices, as the naira has traded below 1400 against the USD consistently since January 29.

Furthermore, Oni explained that strengthening external accounts, rising offshore FX inflows, and improving remittances continue to boost foreign exchange supply.

In addition, the Central Bank of Nigeria has stepped into the FX market by purchasing USD to moderate the pace of naira appreciation.

As a result, the Nigerian economy remains on track to grow by 3.86 percent year on year in Q1 2026, while real GDP is projected to reach 4.1 percent year on year in 2026.

He further noted that the government has maintained visible momentum across infrastructure, livestock development, trade facilitation, and investment attraction in oil and gas as well as manufacturing. In addition, the Dangote Refinery is expected to sustain forward linkage effects across multiple sectors of the economy.

Moreover, Oni added that likely lower interest rates, supported by easing inflation and exchange rate stability, should stimulate private consumption and business investment in 2026.

Consequently, more sectors are expected to contribute to real GDP growth in 2026 compared with 2025, which could translate into improved living conditions for citizens after two years of absorbing the full negative effects of the government’s flagship reforms.

Readings above 50.0 signal improvement in business conditions relative to the previous month, while readings below 50.0 indicate deterioration.

After dipping below the neutral 50.0 mark in January, the headline PMI rebounded decisively from 49.7 to 53.2 in February.

Therefore, the latest data points to a solid month on month recovery in private sector health. Except for January’s temporary dip, business conditions have strengthened continuously since December 2024. Notably, new orders returned to growth, supported by improving customer demand and better product affordability.

Subsequently, stronger new business inflows, rising customer numbers, and expanded product offerings collectively fuelled a marked acceleration in output growth, which reached its fastest pace in four months.

Encouragingly, all four monitored sectors recorded higher activity, with wholesale and retail posting a renewed expansion.

In response to stronger demand, firms expanded their workforce again, and notably at the fastest pace since last October. As a result, employment has now risen for nine consecutive months.

However, despite sustained hiring, backlogs of work increased sharply, reaching their fastest build up since May 2020. Survey panellists attributed the rise in outstanding business to delayed client payments, staff and material shortages, and persistent power supply challenges.

Nevertheless, in a bid to keep pace with order requirements, companies boosted purchasing activity and significantly increased inventory holdings in February.

At the same time, suppliers’ delivery times continued to improve, supported by prompt payments and better traffic conditions.

Crucially, the stronger currency triggered a marked slowdown in purchase cost inflation during February. Indeed, the latest increase in purchase prices was the weakest recorded in just over six years.

Where inflationary pressures persisted, respondents linked them primarily to higher animal feed and raw material costs. Meanwhile, cost of living adjustments kept staff expenses on an upward path.

Even so, as purchase cost pressures softened, firms raised their output prices at a much slower pace. Here again, the rate of increase fell to its weakest level since January 2020.

Looking ahead, advertising initiatives and expansion plans remain central to firms’ positive output expectations over the next 12 months. Although sentiment improved in February, it remained relatively subdued overall.