Nigeria manufacturing slowdown deepens as Stanbic IBTC PMI shows rising fuel costs and inflation pressures weakening private sector growth

Stanbic IBTC Bank released its latest Purchasing Managers’ Index report indicating a slowdown in Nigeria’s private sector growth, as rising fuel costs and persistent inflationary pressures weighed heavily on manufacturing output and broader economic activity at the end of the first quarter of 2026.

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The report showed that while business activity continued to expand in March, the pace of growth weakened compared to February, reflecting mounting cost pressures that affected production levels across key sectors, including manufacturing.

Stanbic IBTC Bank’s Head of Equity Research for West Africa, Mr Muyiwa Oni, said the headline PMI recorded 51.9 in March, down from 53.2 in February, but remained above the neutral 50.0 threshold, signalling continued albeit modest expansion in private sector conditions.

Mr Oni noted that firms continued to benefit from resilient demand and rising new orders, but warned that escalating fuel costs and power supply challenges had constrained output growth in several industries.

He said inflationary pressures intensified during the period, with input prices rising at the fastest rate since January 2025, driven largely by higher fuel-related purchase costs and widespread cost pass-through across sectors.

According to the Nigeria manufacturing slowdown inflation report, price increases were particularly sharp in manufacturing and agriculture, where firms reported significant increases in production costs and selling prices.

Mr Oni further explained that businesses continued to expand employment and purchasing activity in response to new orders, but stressed that sustained inflation could dampen demand if energy price pressures persist.

The report also highlighted external risks, including geopolitical tensions in the Middle East, which could further elevate global oil prices and contribute to prolonged inflationary conditions in Nigeria.

Despite the challenges, firms remained cautiously optimistic about future output, citing planned business expansions and increased promotional activity as potential growth drivers in the coming months.

However, the report warned that persistent inflationary pressures could lead to higher interest rates for longer, potentially slowing consumer demand and private sector momentum.

Economic projections contained in the report estimate Nigeria’s economy could grow by 4.22 percent in 2026, supported by improvements in non-oil sectors such as services, agriculture, and manufacturing, though oil sector growth is expected to moderate.

Also read: Nigeria Black Market Dollar Rate Rises Sharply

The Nigeria manufacturing slowdown inflation trend, analysts say, underscores the fragile balance between economic recovery and cost-driven pressures that continue to shape business performance across the country.