How trade, manufacturing sector fared in February

Business activities in Nigeria saw a sustained improvement in February as the economic reforms bear fruit.

According to the latest NESG-Stanbic IBTC Business Confidence Monitor (BCM), the Current Business Performance Index rose to +11.50, up from +5.69 in January, signaling continued growth despite persistent economic challenges.

It said the trade sector led the gains with a robust increase of +21.48, followed by manufacturing (+10.35), non-manufacturing (+10.21), services (+7.15), and agriculture (+2.69).

However, sectoral performance varied, with some industries witnessing strong gains while others struggled with structural constraints.

Trade Sector

The Trade sector posted the most significant gains, with its index rising sharply to +21.48 from -0.84 in January, signalling a notable rebound in business confidence and modest gains for the trade sector

The report said this improvement was primarily driven by stronger sales performance and seasonal factors that supported business activities at the start of the year.

It added that both Wholesale (+23.90) and Retail (+19.06) segments recorded strong business confidence, driven by higher consumer spending and trade restocking.

The sector remained a key employer, particularly within the informal segment, reinforcing its position as one of Nigeria’s most significant job providers, the report said. However, high operating costs and restricted access to credit (+21.62) tempered growth expectations. The Business Activity Index surged to +44.49, reflecting improved liquidity and demand conditions.

Manufacturing Sector

The manufacturing sector recorded its first positive performance of the year, rising to +10.35 from -0.66 in January.

The report said strong gains in the Food, Beverage, and Tobacco (+19.78) and Plastic and Rubber Products (+12.98) sub-sectors contributed to this growth.

However, challenges such as high production costs, weak demand, and supply chain disruptions affected Textile, Apparel, and Footwear (-2.70), Cement (-1.61), and Pulp, Paper, and Paper Products (-0.54).

It added that the persistent challenges continued to weigh on the sector, as reflected in the cost of doing business index at +48.35 and the price index at -28.88, highlighting inflationary pressures and high interest rates.

“Despite the recovery in the general business situation, high financing costs and supply chain disruptions remain significant risks to business operations,” NESG added.

Read also: Trade, manufacturing sector boost business activities in February

Non-Manufacturing Industries

The Non-Manufacturing sector showed a modest recovery, with its index improving to +10.21 from -4.64 in January, this marks a notable recovery from January 2025, when the sector faced a relatively negative outlook.

Natural Gas, Oil & Gas Services, and Construction recorded positive growth, though still weak, with index points of +14.82, +13.36, and +12.24, respectively.

Meanwhile, Crude Petroleum and other non-manufacturing industries posted modest gains, with index points of +2.14 and +4.06. These improvements were primarily driven by improvement in cash flow and an uptick in the general business situation in the sector.

NESG added that the sector’s recovery was primarily fueled by an improved general business environment, increased production, rising demand, stronger exports, and higher operating profits. This suggests that businesses are benefiting from improved conditions in the Nigerian Oil & Gas and Construction sectors.

However, persistent financial constraints, a high cost of doing business (+51.41), and subdued investment (-42.66) continued to pose significant challenges. Limited access to credit (+9.95) and rising energy costs further hindered expansion efforts, the report added.

Services sector

The Services sector reported positive business performance, with its index rising to +7.15 from +1.40 in January, the return to positive business performance suggests that businesses have stabilised and expanded their activities.

Performance across the sector’s six major sub-sectors was positive, albeit at varying levels. Financial Institutions (+29.12), Broadcasting (+27.86), and Real Estate (+23.57) reported strong business performance driven by improved demand and financial outcomes.

Meanwhile, Professional Services (+17.30) and Telecommunications & Information Services (+11.50) saw modest growth, reflecting the sector’s usual seasonal uptick in activity.

The report added that despite these gains, high business costs (+45.15) and declining investment (-30.41) remained critical concerns, limiting stronger growth prospects.

Agriculture sector

The agriculture sector maintained positive performance but at a slower pace.

The sector’s index declined to +2.69 from +10.85 in January, largely due to mixed growth across sub-sectors. While Fishing (+6.67), Agro-Allied (+7.86), Livestock (+1.58), and Crop Production (+1.43) recorded weak but positive expansion, the Forestry sub-sector declined (-5.00) due to weaker demand and reduced processing activities.

Despite the overall slowdown in business performance, the report said key indicators suggested a relatively stable and improving agribusiness environment.

“Gains were recorded in exports and operating cash flow, while general business conditions, production, demand, access to credit, and employment remained weakly positive, sustaining overall sector performance,” NESG added.