Nigerian firms ended 2025 on an optimistic note as business confidence climbed to a six-month high in December amid sustained private sector expansion and improving macroeconomic conditions.
According to the latest Purchasing Managers Index (PMI) survey released by Stanbic IBTC bank over the weekend, nearly 59% of respondents held a positive outlook for the year ahead, supported by plans to boost expansion spending and product exports.
“Nigerian private-sector firms were much more confident in the outlook for business activity at the end of 2025,” the report said. “Sentiment jumped to a six-month high as close to 59% of respondents predicted growth.”
The improved sentiment came as business activity expanded for the thirteenth straight month in December as reflected in a PMI reading of 53.5.
Although growth eased slightly from 53.6 in November — the second straight monthly slowdown — the bank noted that last month’s print remained close to the average reading for 2025 and signalled a solid uptick in operating conditions.
Stanbic’s PMI surveys provide a single-figure snapshot of private-sector health by tracking new orders, output, employment, suppliers’ delivery times and stocks of purchases. Readings above 50.0 indicate an improvement in business conditions from the previous month, while readings below 50.0 signal deterioration.
The latest expansion was driven by stronger demand and higher new orders which allowed businesses to boost output for the fourteenth straight month. Agriculture recorded the sharpest growth in business activity even as expansion remained broad-based.
Firms also strengthened hiring and purchasing activity as sales picked up, while delivery times shortened. reflecting prompt payments and lower road traffic.
Cost risks persist
Meanwhile, costlier raw materials drove up input costs forcing firms to raise selling prices, with the most pronounced increase recorded in manufacturing.
Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank, attributed the renewed price pressures to higher spending during the festive period, which he said could stoke headline inflation in December.
“And so, Inflation should increase m/m and y/y in December, although the y/y increase is likely to be significant on account of a low-base effect from the corresponding period of the prior year – an outcome of the country’s rebased CPI,” Oni said.
“Therefore, we estimate inflation at 1.44% m/m which implies a CPI of 132.34, and y/y headline inflation of 32.34% in December.”
If this forecast holds, it would mark the first uptick in inflation since March 2025 and a sharp reversal of Nigeria’s recent disinflation trend.
Consumer prices moderated sharply last year, falling from 24.4% in January to a five-year low of 14.4%% in November bolstered by a less volatile exchange rate.
Strong private sector growth, reforms brighten economic prospects
Despite the projected resurgence of upward price growth in December, analysts expect the broader economy to expand by 3.8% in 2025 and further accelerate to 4% by 2026.
This outlook is underpinned by improving business conditions, ongoing fiscal and structural reforms and expectations of lower fuel prices as Dangote refinery steps up production.
“Both Manufacturing and Services are likely to see higher growth in 2025 compared to 2024 levels,” said Muyiwa Oni. “Elsewhere, the government has been visible in infrastructure, livestock development, easing trade constraints, and attracting investments in oil & gas and manufacturing.”
Additionally, private spending and investment are likely to rise in 2026 driven by more accommodative interest rates, moderating inflation and currency stabilisation.
“Because of these factors, we see more sectors contributing to real GDP growth rate in 2026 compared to 2025, likely translating to an improvement in the quality of lives of the citizens compared to 2025,” Oni added.
