The Nigerian private sector saw continued growth in March 2025, with key indicators such as output, new orders, and employment all improving at a stronger pace than in February. The latest Purchasing Managers’ Index™ (PMI®) released by Stanbic IBTC Bank posted a solid reading of 54.3, up from 53.7 in February. This marks the highest PMI reading since January 2024, signaling the fourth consecutive month of improvement in business conditions. Readings above 50.0 indicate expansion in the sector, and the latest figure underscores a more robust economic recovery as demand and business activities strengthened during the month.
A central driver of the recovery was an improved demand environment, which significantly boosted new orders. March recorded the sharpest increase in new orders in 14 months, marking the fifth successive month of expansion in this metric. This uptick in demand was accompanied by an accelerated pace of output growth, which was also the most notable since the beginning of 2024. This positive momentum in new orders and output reflects a growing optimism among businesses, as they take advantage of softer inflationary pressures and more favorable market conditions.
Muyiwa Oni, Head of Equity Research for West Africa at Stanbic IBTC Bank, commented on the findings, stating, “Softening inflationary pressures are helping to improve domestic demand conditions, which in turn support overall improvement in private sector activity in Nigeria. Consequently, private sector activity strengthened for the fourth consecutive month, with the headline PMI settling higher at 54.3 points in March from 53.7 points in February, its highest print since January 2024 (54.5 points).”
The survey results highlighted that employment levels also increased for the fourth consecutive month, although some companies reported hiring staff on a contract basis. This rise in staffing levels was directly linked to an increase in business activity, with firms needing more personnel to keep up with higher production demands. Additionally, companies ramped up their purchasing activity, resulting in a notable rise in the stockpiles of inputs, as firms prepared to meet current and future business requirements. Some companies also took advantage of the softening price inflation to stockpile inputs at a lower cost.
Inflationary pressures, while still present, moderated in March. Input costs increased at the slowest pace since May 2023, signaling that price increases for raw materials and labor were less steep. This easing in cost pressures also translated to a softer rise in selling prices for companies. The output price inflation rate, which reflects the costs businesses pass on to consumers, slowed for the third consecutive month, indicating that businesses were able to absorb some of the inflationary pressures without significantly raising their prices.
Despite this improvement in business conditions, companies were less optimistic about the 12-month outlook for activity. Confidence in future business growth weakened, with the sentiment falling to a three-month low. This reflects concerns over the continued economic uncertainty, even as the immediate outlook for the sector improves. Companies that were optimistic about future growth cited planned advertising campaigns, new investments, and the opening of new branches as key drivers of future expansion.
The overall health of the Nigerian private sector improved notably in Q1 2025, with activity in March reflecting a much better position compared to the preceding quarter. This aligns with a forecasted growth rate of 3.9% year-on-year for the non-oil sector in Q1 2025. This growth is expected to continue throughout the year, driven by stabilizing foreign exchange conditions, improved liquidity, and a forecasted reduction in borrowing costs. These factors bode well for key sectors, such as manufacturing, trade, and real estate, which are all expected to see positive growth in 2025.
The non-oil sector, in particular, is projected to grow by 3.4% year-on-year in 2025, further supporting Nigeria’s broader economic growth forecast of 3.5% for the year. The continued improvement in domestic demand, coupled with stable FX conditions and reduced borrowing costs, is expected to fuel economic expansion and job creation across several sectors.
In terms of sectoral performance, all four sectors covered by the PMI report—manufacturing, services, agriculture, and construction—reported increased output, signaling broad-based growth. The increase in new orders and output requirements encouraged businesses to expand their staffing levels and increase input purchasing. The manufacturing sector, in particular, showed strong gains, supported by the rising demand for both finished goods and raw materials. Construction and services sectors also contributed to the overall growth in output and employment.
Despite this positive data, the PMI report indicated that the pace of expansion was not uniform across all sectors. While manufacturing and services posted strong performance, the agricultural sector saw more modest gains, reflecting lingering challenges such as high input costs and supply chain disruptions. Nonetheless, the overall trend points to strengthening business conditions across the Nigerian private sector.
In conclusion, the Nigerian private sector showed resilience and growth in March, with a stronger demand climate, easing inflationary pressures, and improved business sentiment. Although firms remain cautious about long-term prospects, the current momentum points to continued growth in the coming months. With favorable conditions expected to persist throughout 2025, Nigeria’s non-oil sector is well-positioned to continue driving the country’s economic recovery.
