The Business Expectations survey report, released by the Central Bank of Nigeria (CBN), for the month of October showed that business owners were less optimistic about Nigeria’s macroeconomic outlook for the month of November 2018 than in the previous month.
The overall business confidence index for October and outlook for the November were positive, but moderated to 23.2 points from 24.8 points optimism level in the preceding period September and 64.4 points from 64.5 points for October respectively.
Of the four sectors surveyed, three sectors showed that business owners’ optimism about the economy weakened in October 2018. The ‘construction’, ‘services’ and ‘wholesale & retail trade’ sectors index points declined to 7.7 points from 16.2 points, 25.3 points from 28.8 points and 25.3 points from 26.0 points respectively.
Also, optimism of private businesses operating in the ‘construction’ sector and ‘services’ sector on the economy mellowed for the month of November as their respective index points moderated to 59.0 points from 67.6 points and 65.0 points from 67.9 points respectively.
The survey revealed that among other conditions, insufficient power supply, higher interest rate, unfavorable political climate and unclear economic laws continued to constrain business activity in the month of October 2018.
The report, however, showed that the volume of total order book and business activity in October remained positive as their index points improved to 17.4 points from 16.0 points and 18.8 points from 15.2 points respectively.
The apex bank’s survey on businesses’ financial conditions -working capital and average capacity utilization improved as their indices stood at 15.6 and 23.0 index points respectively in October 2018, when compared with the 11.6 and 18.3 points respectively recorded in September 2018.
The general improvement in working capital acvording to the CBN report could be partly attributed to the improved access to credit in the month under review as its index points rose to 42.7 in October from 40.4 in September.
The report also showed that most private sector players planned to embark on expansion plans, especially those in the ‘financial service’ sector and ‘wholesale & retail trade’ sector as their respective index points rose to 53.8 and 17.9 in October 2018 from 44.1 and 16.7 in September 2018.
Comenting on the survey, analysts with Cowry assets said the weaker optimism about Nigeria’s economy for November, as expressed by local businesses, was in tandem with their expectation amid weakened macro economic fundamentals. This, coupled with the sustained increase in FPIs’ outflow since July 2018, is expected to lead to further near term worsening of stock market performance.
