PMI Readings Diverge in January as Indicators Send Mixed Signals

Nigeria’s private-sector business activity indicators delivered contrasting signals in January 2026, highlighting uneven momentum at the start of the year. The Stanbic IBTC Purchasing Managers’ Index declined to 49.7 from 53.5 in December, falling below the 50-point threshold that separates expansion from contraction for the first time since the survey began in 2014. A reading below 50 indicates that more firms reported worsening conditions than improvement, pointing to a contraction in overall business activity during the month. The slowdown was associated with stagnating new orders, sharply slower output growth, and reduced purchasing activity following the festive period.

By contrast, the Central Bank of Nigeria’s composite PMI remained firmly expansionary at 55.7, extending a fourteen-month growth streak. While slightly lower than December’s 57.6 reading, the CBN index indicates that momentum was maintained rather than reversed. The survey showed continued expansion across agriculture, industry, and services, with most subsectors reporting improved output and demand conditions. Agriculture recorded its eighteenth consecutive month of expansion, while industry and services also sustained growth, pointing to resilience on the production and supply side despite broader macroeconomic constraints. Additional signals from the manufacturing sector help frame this divergence. Financial disclosures from listed manufacturers show that unsold finished goods inventories rose to about ₦1.8 trillion in the first nine months of 2025, up from roughly ₦1.6 trillion a year earlier. This inventory build-up suggests that while production has remained active, weaker consumer demand and rising costs have slowed inventory turnover, particularly for non-essential goods.

Taken together, the indicators suggest that January reflected a period of adjustment rather than a uniform shift in economic direction. Post-festive demand normalization has historically made January a volatile month for business indicators, especially those sensitive to consumption trends. The key test will be whether subsequent readings converge. A rebound would support the view that January was a temporary pause, while sustained weakness would raise questions about household demand, employment momentum, and the economy’s ability to sustain growth above 4 percent in 2026, as projected by most forecasts.

US–Nigeria Trade Balance Turns to $1.45bn US Surplus in 2025

The United States recorded a $1.45 billion goods trade surplus with Nigeria between January and October 2025, reversing a $1.37 billion deficit over the same period in 2024. The shift reflected a combination of sharply higher Nigerian imports from the US and weaker Nigerian exports. US goods exports to Nigeria rose by 60.2 percent year on year to $5.94 billion, up from $3.71 billion in 2024, while Nigerian exports to the US declined by 11.5 percent to $4.49 billion from $5.07 billion. The outcome implies a net increase in dollar outflows from Nigeria through trade over the period.

Trade composition remains central to explaining the imbalance. Nigeria’s imports from the US are concentrated in refined petroleum products, machinery and transport equipment, chemicals, and agricultural commodities such as durum wheat, while exports remain narrowly anchored to crude oil, fertilisers, and a limited set of non-oil goods. The deterioration in Nigerian exports coincided with the implementation of a US reciprocal tariff regime in mid-2025, which raised Nigeria’s tariff rate from 14 percent to 15 percent and applied largely to non-oil exports. While crude oil exports were mostly exempt, higher duties on non-oil goods likely reduced price competitiveness and dampened demand, complicating Nigeria’s ability to fully leverage preferential access frameworks such as AGOA.

From a macro perspective, the data underline Nigeria’s continued exposure to asymmetric trade relationships with high-standard markets. Without a sustained expansion in value-added exports and stronger competitiveness in markets with stringent tariff and compliance regimes, bilateral trade growth risks translating into higher dollar outflows rather than a durable improvement in external balances. Over time, reducing the structural gap between what Nigeria imports and what it can export competitively will be critical for easing FX pressures and strengthening trade resilience.

External Reserves Reach Eight-Year High of $46bn

Nigeria’s external reserves climbed to $46billion in early February 2026, their highest level since August 2018, providing short-term support for foreign exchange stability and contributing to modest gains in the naira across both official and parallel markets. The reserve build-up has contributed to easing immediate liquidity pressures and improving market confidence. However, while the headline level of reserves is clearly positive, the underlying sources of accumulation remain critical to assessing how durable this improvement will be over the medium term.

This distinction matters for sustainability because reserves built primarily on short-term financial inflows are more vulnerable to reversal than those anchored in stable export earnings and a structurally stronger current account. While remittances provide a steadier cushion, oil-related inflows remain exposed to price volatility beyond Nigeria’s control. At roughly 14 months of import cover, reserves offer breathing space, but maintaining this buffer through 2026 will depend on deepening non-oil export earnings, managing external liabilities prudently, and sustaining investor confidence as global financial conditions evolve.

FAAC Allocations Edge Higher in December on VAT Gains

The Federation Account Allocation Committee distributed ₦1.97 trillion as December 2025 revenue to the federal, state, and local governments, slightly higher than November’s ₦1.93 trillion. The allocation was driven by ₦1.08 trillion in statutory revenue, ₦846.5 billion in Value Added Tax, and ₦38.1 billion from the Electronic Money Transfer Levy. While the headline figure suggests modest improvement in near-term cash flows, the underlying composition of revenues reveals a more uneven fiscal picture.

While FAAC allocation provides short-term relief for national and subnational governments reliant on FAAC for salaries and basic services, it does little to alter the broader fiscal picture. Federal Government FAAC receipts for 2025 totaled about ₦7.24 trillion, set against a ₦54.9 trillion federal budget in 2025 and a ₦58.47 trillion spending plan for 2026, underscoring the narrow fiscal space within which government operations are financed.
Against this backdrop, the Senate’s move to revise the revenue-sharing formula in favour of a higher federal allocation signals mounting pressure at the centre, but also raises risks for subnational sustainability, as deficit financing pressures are likely to persist into 2026 without stronger oil revenues or broader non-oil tax mobilisation beyond VAT.

Nigeria Customs Revenue Surges to ₦7.28 Trillion

The Nigeria Customs Service recorded ₦7.28 trillion in revenue in 2025, exceeding its ₦6.58 trillion target by ₦697 billion and marking 19 percent year-on-year growth. Collections were heavily concentrated at Lagos ports, with Apapa generating ₦2.93 trillion and Tin Can Island ₦1.57 trillion, reflecting both the scale of import activity through these gateways and improved revenue capture driven by tighter controls, better compliance, and expanded use of digital systems.

Customs revenue can contribute more reliably to easing fiscal pressures over time by supporting trade competitiveness and compliance, if improved systems translate into faster clearance, lower trade costs, and more predictable border processes. Without that transmission, strong collections may persist alongside high logistics costs, limiting the extent to which revenue gains translate into wider economic and fiscal benefits.