Despite the headline PMI rising to 54.3 in March 2025, marking the highest reading since January 2024, business confidence continues to wane, falling to a three-month low.

This is contained in the latest Stanbic IBTC Bank’s Purchasing Managers’ Index (PMI) report.

The cautious sentiment among firms reflected concerns about continued challenges in the business environment.

This comes as input cost inflation slowed to its weakest pace in 10 months, with businesses reporting softer increases in both purchase prices and staff costs.

Although overall input costs continued to rise, the pace of inflation eased for the fifth month running and was at its slowest since May 2023.

Both purchase prices and staff costs increased at slower rates at the end of the opening quarter of the year.

According to the report, the easing inflationary pressures have significantly supported domestic demand conditions, allowing private sector activity to strengthen further.

Head of Equity Research West Africa, Stanbic IBTC Bank, Muyiwa Oni, said softening inflationary pressures are improving domestic demand conditions, supporting an overall improvement in private sector activity.

“Consequently, private sector activity strengthened for the fourth consecutive month, with headline PMI settling higher at 54.3 points in March from 53.7 points in February, its highest point since January 2024 (54.5 points),” the report said.

Despite the moderation in input costs, firms continued to experience notable rises in both purchase prices and staff costs. However, the pace of these increases was slower compared to previous months.

The reduction in inflationary pressure also allowed companies to ease the rate at which they increased selling prices, marking the third successive month of softer output price inflation, the report said.

Also, the private sector witnessed a marked increase in output and new orders, according to the report.

The rate of growth in new orders accelerated to its highest level in 14 months, driven by stronger customer demand and increased client requests.

As demand increased, output growth also gained momentum, marking the sharpest expansion since January 2024, it reported.

All four monitored sectors – agriculture, manufacturing, construction and services – were said to have reported improved output levels during the month.

This encouraged firms to expand their workforce, with March marking the fourth consecutive month of job creation, the MI said.

The pace of employment growth was the most marked since August 2024, even though some firms opted for contract hiring to meet increased workload demands.

Suppliers’ delivery times, it said, continued to shorten, though the improvement was less pronounced compared to the previous month. Businesses attributed this to prompt payments and favorable road conditions. Faster delivery times allowed companies to maintain a steady flow of inputs to support production.