Economy
Business Conditions in Nigeria Deteriorate Further as PMI Sinks
Inflationary pressures intensified in September, adding to the challenges faced by Nigerian companies as the third quarter drew to a close.
Although new orders increased for a second month running, the rate of growth remained muted and insufficient to prevent a further reduction in business activity.
Likewise, the rate of job creation was only marginal and eased to a three-month low.
The headline figure derived from the survey is the Stanbic IBTC Purchasing Managers’ Index (PMI). Readings above 50.0 signal an improvement in business conditions in the previous month, while readings below 50.0 show a deterioration.
Muyiwa Oni, Head of Equity Research West Africa at Stanbic IBTC Bank commented: “Nigeria’s PMI remained below the 50-point mark for the third consecutive month, settling at 49.8 points in September from 49.9 points in August.
“This points to a further fractional deterioration in business conditions, the third in as many months, largely due to challenging demand conditions amid the inflationary environment.
“Still, the pace of deterioration remained marginal as some firms were able to secure greater new business during the month. Output increased in agriculture and manufacturing, but fell in wholesale & retail and services.
“Meanwhile, companies remained reluctant to hold inventories in September, cutting stocks of purchases for the second month running and to the largest extent since May 2020.
“Inventories were reduced in line with falling output and muted customer demand. Elsewhere, input costs increased to their third steepest on record while output prices quickened to their fastest level in six months.
“Business activity was underwhelming in Q3:24 relative to Q2:24, implying that the non-oil sector may grow slowly in Q3:24 amid the triple whammy of high inflation rate, elevated interest rates, and currency volatility all of which continue to undermine domestic demand and business investments.
“However, because of higher crude oil production relative to the same period last year, the oil sector is likely to compensate for a lacklustre non-oil sector’s performance, thereby pushing real GDP growth to 3.10% y/y in Q3:24, based on our estimates.”
The headline PMI was little changed in September, posting 49.8 following a reading of 49.9 in August. As such, the index pointed to a further fractional deterioration in business conditions, the third in as many months.
Companies continued to report challenging demand conditions, in large part due to the inflation environment.
In fact, September saw an intensification of inflationary pressures, with both input costs and output prices increasing at the sharpest rates in six months. Purchase prices rose rapidly amid currency weakness and higher costs for fuel, logistics, materials, and transportation.
Some firms made efforts to help their workers with higher living costs, but the rate of wage inflation eased to an 18-month low. Higher costs were then passed through to customers, with close to 49% of respondents raising selling prices in September.
Although sharp price increases acted to limit customer demand, new orders rose for the second month running in September, and to a slightly greater extent than in August. However, the rate of expansion remained modest.
Business activity continued to fall marginally as the tentative improvement in new orders was insufficient to support an expansion of output. Activity was down for the third month running. Output rose in agriculture and manufacturing, but fell in wholesale & retail and services.
Employment increased for the fifth month running, but only marginally as some firms limited hiring in an effort to reduce costs. Companies also maintained a cautious approach to inventory levels, lowering stocks of inputs for the second month running, and to the largest extent since May 2020.
Firms were also reportedly keen to eliminate backlogs of work wherever possible given the cost of holding goods. The fall in inventories was recorded despite a renewed increase in purchasing activity, the first in three months.
Meanwhile, suppliers’ delivery times continued to shorten solidly. Business confidence fell in September and was the second-lowest on record, only just above the series nadir posted in July. Those respondents who were optimistic regarding the year ahead outlook linked this to hopes that business conditions will improve, alongside business expansion plans.
By Dipo Olowookere
A 0.26 per cent growth was achieved by the Nigerian Exchange (NGX) Limited on Wednesday on the back of sustained bargain-hunting by investors.
This happened despite a pocket of profit-taking, with industrial goods losing 0.63 per cent and the energy index shedding 0.05 per cent.
But the insurance space increased by 2.02 per cent, the banking counter appreciated by 1.48 per cent, the commodity sector improved by 0.48 per cent, and the consumer goods segment rose by 0.03 per cent.
Consequently, the All-Share Index (ASI) went up by 383.71 points to 149,842.82 points from 149,459.11 points and the market capitalisation jumped by N244 billion to N95.525 trillion from N95.281 trillion.
The market breadth index remained positive after the bourse finished with 38 price gainers and 23 price losers, indicating a strong investor sentiment.
The quartet of First Holdco, Lasaco Assurance, Veritas Kapital, and Prestige Assurance gained 10.00 per cent to quote at N39.60, N2.75, N1.76, and N1.65, respectively, while Mecure Industries grew by 9.92 per cent to N50.40.
Conversely, Living Trust Mortgage Bank lost 10.00 per cent to close at N3.15, International Energy Insurance dropped 9.92 per cent to trade at N2.27, McNichols shrank by 6.90 per cent to N2.97, Omatek decreased by 6.84 per cent to N1.09, and Chams dipped by 6.41 per cent to N2.92.
The activity level witnessed a significant surge at midweek, with Ecobank trading 5.3 billion units for N168.7 billion.
Further, First Holdco sold 108.2 million units worth N4.2 billion, Sterling Holdings exchanged 87.3 million units valued at N606.2 million, FCMB transacted 74.3 million units worth N783.6 million, and Access Holdings sold 41.5 million units for N841.4 million.
At the close of trades, market participants traded 5.9 billion units valued at N216.2 billion in 25,205 deals compared with the 1.0 billion units worth N21.8 billion traded in 23,701 deals a day earlier, showing a rise in the trading volume, value, and number of deals by 490.00 per cent, 891.74 per cent, and 6.35 per cent, respectively.
By Adedapo Adesanya
The Naira depreciated against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Wednesday, December 17, by N3.67 or 0.25 per cent, closing at N1,455.49/$1, in contrast to Tuesday’s closing price of N1,451.82/$1.
Also, the local currency weakened against the Euro in the official market at midweek by 98 Kobo to close at N1,706.72/€1 versus the previous session’s price of N1,705.74/€1, but improved against the Pound Sterling by 75 Kobo to trade at N1,943.28/£1 compared with the N1,943.98/£1 it traded a day earlier.
At the GTBank forex counter, the Nigerian currency lost N3 against the greenback to finish at N1,463/$1 versus N1,460/$1 and in the parallel market, it remained unchanged at N1,475/$1.
Thin US dollar inflows from exporters, non-bank corporate, foreign portfolio investors and absence of immediate intervention of the Central Bank of Nigeria (CBN) to strengthen supply triggered fresh pressure.
This is coming off the back of decline in inflows through the Nigerian Foreign Exchange Market which decreased to $716.3 million last week from $844.70 million in the previous week , a 15 per cent drop in a week.
The intervention comes as the CBN expect inflows from Detty December to alleviate need for FX demand, but exorbitant local prices may be keeping spending at bay.
Regardless of the seasonal demand, positive FX support for the local currency through 2025 signals a deliberate action to ensure the local currency maintains the trading range amidst growing external reserves. Latest data showed that gross external reserves position advanced to $45.47 billion, reflecting a 11.2 per cent Year-to-Date (YTD) gain.
In the cryptocurrency market, there was selling pressure as traders liquidated positions amid a short-rally, leading Litecoin (LTC) to slip by 5.2 per cent to close at $75.12m, as Cardano (ADA) depreciated by 5.0 per cent to $0.3619, and Dogecoin (DOGE) lost 4.8 per cent to finish at $0.1247.
In addition, Ripple (XRP) depreciated by 4.7 per cent to $1.83, Solana (SOL) crashed by 4.1 per cent to $122.62, Ethereum (ETH) went down by 3.9 per cent to $2,826.62, Binance Coin (BNB) fell by 3.4 per cent to $833.07, and Bitcoin (BTC) tumbled by 0.5 per cent to sell at $86,436.66, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 each.
By Adedapo Adesanya
Crude oil prices rallied by more than 1 per cent on Wednesday after the United States President, Mr Donald Trump, ordered a blockade of all oil tankers under sanctions entering and leaving Venezuela.
Brent crude settled at $59.68 a barrel after chalking up 76 cents or 1.3 per cent, while the US West Texas Intermediate (WTI) crude traded at $55.94 a barrel, up 67 cents or 1.2 per cent.
Mr Trump ordered a blockade of sanctioned tankers heading to or departing from Venezuela, the latest move to increase pressure on Nicolas Maduro’s government, targeting its main source of income.
At least 34 US-sanctioned oil tankers with a history of carrying Venezuelan oil are currently at sea in the Caribbean.
Oil market participants said prices were rising in anticipation of a potential reduction in Venezuelan exports, although they were still waiting to see how Trump’s blockade would be enforced and whether it would extend to include non-sanctioned vessels.
The country, which is a member of the Organisation of the Petroleum Exporting Countries (OPEC), has produced around 900,000 barrels of crude oil and condensate so far in 2025, accounting for roughly 1 per cent of the total global supply.
Venezuela could lose up to 500,000 barrels per day of its oil production, according to Reuters estimates. China is the biggest buyer of Venezuelan crude, which accounts for roughly 4 per cent of its imports, with shipments in December on track to average more than 600,000 barrels per day.
While many vessels picking up oil in Venezuela are under sanctions, others transporting the country’s oil and crude by way of Iran and Russia have not been sanctioned.
Crude oil inventories in the US decreased by 1.3 million barrels during the week ending December 12, after losing 1.8 million barrels in the week prior, according to new data from the U.S. Energy Information Administration (EIA) released on Wednesday.
The EIA’s data release follows figures by the American Petroleum Institute (API) that were released a day earlier, which suggested that crude oil inventories fell by a massive 9.2 million barrels.
For total motor gasoline (petrol), the EIA reported that inventories had increased by 4.8 million barrels, on top of the 6.4 million barrel gain in the week prior. For middle distillates, inventories increased by 1.7 million barrels, with production easing by 228,000 barrels daily to an average of 5.2 million barrels daily.
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