For the first time since the Stanbic IBTC Purchasing Managers’ Index (PMI) began tracking Nigeria’s economy in 2014, the private sector recorded a contraction in the month of January. The headline PMI tumbled from 53.5 in December 2025 to 49.7 in January 2026, falling below the critical 50.0 threshold that separates growth from decline.
While a seasonal dip following the festive period is typical, this particular sub-50 reading is being viewed by analysts as a “negative surprise” that signals more than just a holiday hangover.
1. The Anatomy of the 49.7 Dip
The slowdown was not uniform across the economy. It was primarily driven by a “muted start” in specific areas, while others remained resilient.
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The Retail Drag: The Wholesale and Retail sector was the primary anchor, falling deep into contraction. After the aggressive consumer spending of December, new orders stagnated, and demand hit a temporary wall.
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Resilient Pillars: Despite the overall contraction, Agriculture, Manufacturing, and Services managed to maintain growth, preventing a sharper economic slide.
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Price Pressures: Paradoxically, while demand softened, costs rose. Input prices and staff wages increased at their fastest rate since mid-2025, forcing firms to hike selling prices at a four-month high.
2. Why This January is Different
Historically, January’s PMI is almost always lower than December’s, but it usually stays above 50. Muyiwa Oni, Stanbic IBTC’s Head of Equity Research, warned that this 13-month growth streak’s end suggests “deeper issues” might be at play, including:
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Post-Reform Fatigue: Businesses are still navigating the long-term impact of 2024–2025 fiscal reforms.
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Logistics & Grid Issues: Incessant power grid collapses and trade constraints continue to throttle output potential.
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Stagnant New Orders: For the first time in 14 months, the volume of new business failed to grow, ending a long-running sequence of expansion.
3. The Silver Lining: Jobs and Backlogs
In a show of long-term confidence, companies did not stop hiring.
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8 Months of Job Growth: Staffing levels increased for the eighth consecutive month as firms boosted wages to help employees cope with the cost of living.
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Clearing the Desk: With fewer new orders and stable staffing, companies were able to clear their “backlogs of work” at the fastest rate since March 2025.
4. 2026 Forecast: 4.1% GDP Growth Remains on Track
Despite the rocky start to the year, Stanbic IBTC and other major analysts like Bismark Rewane (Financial Derivatives Company) maintain an optimistic 4.1% GDP growth forecast for 2026.
