Admin I Monday, February 03.26
LAGOS, Nigeria — For over a decade, the start of the year in Nigeria has followed a predictable pattern: a post-holiday lull followed by steady resilience. But January 2026 has broken that streak, marking a historic shift as the country’s private sector dipped into contraction for the first time in the history of the survey.
The Stanbic IBTC Purchasing Managers’ Index (PMI), a key barometer of economic health, fell to 49.7 in January from 53.5 in December.
Any reading below the 50.0 threshold indicates a deterioration in business conditions.
While the dip is narrow, its symbolic weight is heavy—this is the first time since the survey began in 2014 that January has failed to clear the neutral mark.
A Tale of Two Economies
The downturn was not felt equally across the board. The data reveals a sharp divide between different sectors of the Nigerian economy:
Wholesale & Retail: The primary driver of the slump, seeing activity plunge deep below the growth threshold.
Agriculture, Manufacturing, and Services: These sectors remained in expansionary territory, providing a thin buffer against a broader economic slide.
Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank, noted that while January typically sees “quiet activity” following the festive season, the current figures suggest “deeper issues” beyond mere seasonal trends.
The Price of Doing Business
Perhaps most concerning for the average Nigerian is the acceleration of prices. Companies reported the sharpest rise in selling charges in four months, a direct response to ballooning purchase costs and raw material prices.
To combat the rising cost of living, many firms opted to increase staff wages to maintain morale.
While this supported a modest eighth consecutive month of job creation, it added to the “staff costs” burdening the private sector.
Consequently, businesses are passing these expenses directly to consumers.
”The rate of output price inflation quickened to a four-month high amid widespread reports of higher purchase costs being passed through to customers,” the report stated.
Reasons for Optimism
Despite the “negative surprise” of the January data, analysts are not yet sounding the alarm for the full year. Stanbic IBTC maintains a growth forecast of 4.1% for 2026, betting on several structural stabilizers:
Infrastructure & Investment: Continued government focus on livestock development, trade easing, and oil and gas.
The “Dangote Effect”: The massive Dangote refinery is expected to create positive ripples across manufacturing and logistics.
Monetary Relief: Anticipated lower interest rates and a stabilizing exchange rate are expected to revive private consumption.
For now, Nigerian businesses are clearing backlogs and holding onto hope.
While business sentiment dipped slightly this month, the prevailing view among firm owners remains one of cautious optimism—betting that the January chill is merely a temporary setback in a year destined for recovery.
