Uganda overtook Nigeria to lead Africa’s private sector growth at the start of the year, as the West African nation fell back into contraction in January after 13 months of consistent expansion, according to the latest Purchasing Manager’s Index surveys from S&P Global.
Overall, business momentum lost steam across the reviewed markets, with seven of the eight economies registering a softer PMI reading compared with December except South Africa.
The data suggests the slowdown partially reflects slower demand following the festive period.
Beyond Nigeria, Egypt and Ghana also saw business conditions deteriorated, with the gold-producer posting the weakest performance of the month amid renewed falls in new work and activity.
Elsewhere, expansion was modest in Zambia, South Africa and Mozambique. For Africa’s most industrialised economy, however, the latest reading pointed to early signs of stabilisation, as the private sector emerged from contraction following a subdued final quarter of last year.
A closer look
Uganda delivers 12th straight month of private sector expansion
Uganda’s private sector remained firmly in expansion territory in January, marking a 12th consecutive month of improving business conditions.
The headline PMI eased to 52.6 from 54.0 in December, reflecting slower but sustained growth at the start of the year.
Output gains were supported by stronger customer demand, increased marketing efforts and continued job creation, which helped firms reduce outstanding work.
“The improved demand conditions meant sustained increases in quantities purchased, and inventories, though there were delays in deliveries,” said Christopher Legilisho, Economist at Standard Bank.
Price pressures remained elevated as higher utility costs and rising prices for some raw materials pushed input costs higher, which firms passed on to customers. Nonetheless, business optimism stayed strong, with around three-quarters of firms expecting output to rise over the next 12 months.
Business momentum in Nigeria weakens after full-year growth run
After 13 consecutive months of expansion, Nigeria’s private sector activity deteriorated in January as post-festive demand cooled, pushing the headline PMI down to 49.7 from 53.5 in December.
The muted demand environment led to much slower growth in output and purchasing activity, even as employment continued to rise and cost pressures intensified.
While seasonal slowdowns are common at the start of the year, S&P noted that this marked the first time the January PMI has fallen below the 50 no-change threshold since the survey began in 2014, pointing to pressures extending beyond a typical post-holiday lull.
“Despite the negative surprise in the PMI numbers in January, we still see the Nigerian economy growing by 4.1% y/y in 2026 as we expect demand to pick up in subsequent months after the lull seen at the beginning of the year,” said Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank.
Amidst the setbacks, firms remained broadly optimistic about output prospects in the months ahead, although overall sentiment softened from December levels.
Ghanaian firms remain strongly optimistic
Business confidence in Ghana’s private sector rose to a six-month high in January, even as overall operating conditions deteriorated amid renewed declines in output and new orders.
The headline PMI slipped below the 50.0 no-change threshold to 48.5 in January, from 51.1 in December, signalling a modest contraction in business conditions.
Analysts described the setback as temporary, noting that several underlying indicators remained supportive. Employment continued to expand as firms benefited from falling input costs, driven by an appreciation of the cedi against the US dollar toward the end of 2025, which helped lower purchase prices.
“The ongoing lack of inflationary pressure in the private sector illustrates why the Bank of Ghana has been able to reduce interest rates markedly at recent meetings,” said Andrew Harker, Economics Director at S&P.
Business activity in Kenya slows at the sharpest pace since October
Kenya’s PMI eased to 51.9 in January from 53.7 in December, remaining above the 50-point threshold that separates growth from contraction but pointing to a slowdown in operating conditions.
Reinforcing the strong start to the year was a solid expansion in business activity, even though growth slowed to a four-month low amid a softer uplift in demand.
Firms attributed higher output largely to demand-side factors, including increased customer referrals, new contracts linked to marketing campaigns and competitive pricing strategies.
However, employment and purchasing activity recorded weaker gains, reflecting slower order inflows, falling backlogs and concerns over excess inputs. Business sentiment, nonetheless, remained mildly positive even as operating costs surged.
Zambia’s private sector posts modest growth
Fresh expansion in output and demand lifted Zambia’s private sector growth in January, albeit slightly, with the headline PMI edging up to 50.2 , from 50.1 in December.
Firms reported stronger customer orders, supported by an appreciation of the kwacha against the US dollar, which boosted liquidity in the economy. More stable electricity supply also helped underpin business activity.
Employment declined for the first time in nine months, and at the sharpest pace since November 2024, placing pressure on capacity. As a result, backlogs of work rose at the fastest rate since June last year.
Purchase costs fell on cheaper imported goods, although higher wage bills pushed overall input costs higher. Efforts to remain competitive, however, led firms to cut output prices.
Business confidence in Mozambique falls to 14-month low
Amid softer growth in output and new orders, Mozambique’s business outlook in January weakened to its lowest level since November 2024 as operating conditions stalled.
According to S&P Global’s latest survey, the headline PMI eased to the neutral 50.0 mark in January from 50.9 in December, signalling a loss of momentum after steady improvements through the final quarter of 2025.
The softer reading was partly driven by continued reductions in supplier delivery times, a sign of easing supply-chain pressures but also slower demand conditions. As firms grew more cautious about the expectations, the pace of job creation moderated, even though employment expanded for an eighth consecutive month.
Cost pressures, however, intensified. Purchase costs rose at the joint-fastest pace in nearly three years, reflecting higher input prices. Firms also faced rising staff costs, although the latest increase remained relatively modest.
Egypt’s private economy returns to contraction
Egypt’s non-oil private sector slipped back into contraction in January, reversing gains made at the end of 2025 as weak demand weighed on activity and employment fell at its fastest pace in more than two years.
The headline PMI declined to 49.8 in January from 50.2 in December. Despite the downturn, the reading remained above the long-run average, indicating a “strong pace of non-oil GDP growth,” according to S&P.
Although at a slower pace than December, business activity continued to rise, extending a three-month growth run. A pickup in foreign demand provided some support, with output recording its longest expansion streak since late 2020.
Despite easing cost pressures, non-oil firms maintained a cautious outlook for the year ahead.
Operating conditions rebound in South Africa
South Africa’s private sector showed signs of stabilisation in January, with the PMI returning to the neutral 50.0 level from 47.7 in December as output and demand steadied and price pressures eased.
“January data provided a glimmer of hope that the private sector economy has stabilised at the start of the year, after Q4 PMI readings suggested a much softer pace of GDP growth,” said David Owen, Senior Economist at S&P.
Improving demand encouraged firms to step up purchasing activity, recording the strongest increase in four months. Employment, however, fell for the first time since September, although companies were able to reduce backlogs, pointing to subdued order pipelines.
Lower inflation, rising tourism and improved energy supply supported business confidence for the year ahead.
