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 Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange dropped for the third consecutive session on Wednesday, March 18, by 0.39 per cent due to continued sell-offs.
In what would be the final trading session of the week due to public holidays on Thursday and Friday for Eid-el-Fitr, the NASD Unlisted Security Index (NSI) further dipped by 16.14 points to 4,114.75 points from 4,130.89 points, and the market capitalisation lost N9.66 billion to close at N2.461 trillion versus the previous day’s N2.471 trillion.
FrieslandCampina Wamco Nigeria Plc depreciated by N10.32 to sell at N112.00 per share versus N122.32 per share, NASD Plc dropped N4.50 to finish at N41.50 per unit compared with the previous session’s N46.00 per unit, and Geo-Fluids decreased by 9 Kobo to N3.02 per share from N3.11 per share.
On the flip side, Air Liquide Plc improved by N2.23 to N24.57 per unit from N22.34 per unit, Central Securities Clearing System (CSCS) Plc advanced by 90 Kobo to N76.33 per share from N75.43 per share, Food Concepts Plc rose by 24 Kobo to N3.30 per unit from N3.06 per unit, UBN Property Plc surged by 20 Kobo to N2.18 per share from N1.98 per share, Impresit Bakalori Plc jumped 16 Kobo to N1.83 per unit from N1.67 per unit, and First Trust Mortgage Bank Plc added 14 Kobo to trade at N1.89 per share versus N1.75 per share.
During the trading day, the volume of securities went up by 43,404.4 per cent to 400.8 million units from 921,265 units, the value of securities grew by 2,108.7 per cent to N1.2 billion from N54.7 million, and the number of deals soared by 23.7 per cent to 47 deals from 38 deals.
CSCS Plc ended the day as the most traded stock by value (year-to-date) with 38.7 million units valued at N2.4 billion, followed by Infrastructure Guarantee Credit Plc with 400 million units exchanged for N1.2 billion, and Okitipupa Plc with 6.4 million units traded for N1.2 billion.
Resourcery Plc finished the session as the most traded stock by volume (year-to-date) with 1.1 billion units worth N415.7 million, trailed by Infrastructure Guarantee Credit Plc with 400 million units sold for N1.2 billion, and Geo-Fluids Plc with 131.1 million units valued at N505.6 million.
By Dipo Olowookere
The Nigerian Exchange (NGX) experienced a pullback of 0.69 per cent as a result of profit-taking by investors, with shares in the banking and energy sectors mostly affected.
Data harvested by Business Post showed that the energy index was down by 4.58 per cent during the session, and the banking space lost 2.14 per cent.
They brought down the All-Share Index (ASI) by 1,402.56 points to 201,156.85 points from 202,559.41 points and shrank the market capitalisation by N900 billion to N129.126 trillion from N130.026 trillion.
Customs Street ended in red at midweek despite three of the five key sectors finishing in green. The consumer goods counter expanded by 1.19 per cent, the industrial goods index improved by 0.46 per cent, and the insurance sector grew by 0.43 per cent.
Red Star Express declined by 9.98 per cent to N25.70, Aradel Holdings went down by 9.68 per cent to N1,210.30, Presco lost 9.30 per cent to trade at N1,701.10, Living Trust Mortgage Bank crashed by 8.40 per cent to N4.80, and DAAR Communications dropped 7.50 per cent to end at N1.85.
On the flip side, Secure Electronic Technology gained 10.00 per cent to settle at N1.32, Guinness Nigeria rose by 9.92 per cent to N423.20, John Holt increased by 9.72 per cent to N11.85, Sovereign Trust Insurance surged by 9.57 per cent to N2.06, and Linkage Assurance chalked up 9.33 per cent to trade at N1.64.
Investor sentiment was weak yesterday after the bourse registered 33 price gainers and 38 price losers, indicating a negative market breadth index.
Market participants bought and sold 6.1 billion stocks valued at N130.1 billion in 58,562 deals compared with the 1.8 billion stocks worth N88.1 billion traded in 62,654 deals on Tuesday, representing a shortfall in the number of deals by 6.53 per cent, and a spike in the trading volume and value by 238.89 per cent and 47.67 per cent apiece.
The most active equity on Wednesday was eTranzact with 5.2 billion units sold for N24.3 billion, Wema Bank exchanged 111.4 million units worth N3.1 billion, Coronation Insurance transacted 96.4 million units valued at N303.9 million, Dangote Cement traded 75.2 million units for N56.5 billion, and Access Holdings exchanged 61.5 million units valued at N1.6 billion.
By Adedapo Adesanya
The Naira stumbled against the Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Wednesday, March 18, by N8.96 or 0.67 per cent to trade at N1,353.00/$1, in contrast to the previous day’s rate of N1,344.04/$1.
Also, the local currency weakened against the Pound Sterling in the spot market at midweek by N6.06 to sell for N1,801.93/£1 compared with Tuesday’s value of N1,795.87/£1, and lost N4.75 against the Euro to quote at N1,556.22/€1 versus the preceding day’s N1,551.46/€1.
However, the Nigerian currency gained N2 against the greenback yesterday at the GTBank forex desk to close at N1,363/$1 versus the N1,365/$1 it was exchanged for a day earlier, and traded flat in the parallel market at N1,395/$1.
Nigeria’s external reserves fell by $178 million over three consecutive international payments recorded by the Central Bank of Nigeria (CBN), settling at $49.83 billion from $50.008 billion, indicating that there have been some interventions in the FX market for stability and liquidity.
While the wider outlook for the Naira is positive, potential disruptions to global oil supply have increased volatility in energy markets and could spike inflation with higher oil prices.
In the cryptocurrency market, Bitcoin (BTC) slipped below $71,000 on Wednesday as Federal Reserve Chair Jerome Powell flagged rising oil prices amid the war in Iran as a new inflation risk. It sold at $70,538.58.
The US central bank held interest rates steady as expected, but during his post-meeting press conference, Mr Powell acknowledged that the recent surge in energy prices is already feeding into the central bank’s outlook.
He said rising oil prices “for sure showed up” in policymakers’ higher inflation outlook for this year, lifting their forecast to 2.7 per cent from 2.4 per cent.
Further, Ethereum (ETH) lost 6.3 per cent to trade at $2,178.56, Cardano (ADA) fell by 6.1 per cent to $0.2714, Dogecoin (DOGE) dropped 5.7 per cent to close at $0.0096, Solana (SOL) dipped 4.8 per cent to $89.83, Ripple (XRP) slumped by 3.8 per cent to $1.46, and Binance Coin (BNB) declined by 3.7 per cent to $648.61.
However, TRON (TRX) appreciated by 0.4 per cent to $0.3037, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 each.
-
Feature/OPED6 years agoDavos was Different this year
-
Travel/Tourism10 years ago
Lagos Seals Western Lodge Hotel In Ikorodu
-
Showbiz3 years agoEstranged Lover Releases Videos of Empress Njamah Bathing
-
Banking8 years agoSort Codes of GTBank Branches in Nigeria
-
Economy3 years agoSubsidy Removal: CNG at N130 Per Litre Cheaper Than Petrol—IPMAN
-
Banking3 years agoSort Codes of UBA Branches in Nigeria
-
Banking3 years agoFirst Bank Announces Planned Downtime
-
Sports3 years agoHighest Paid Nigerian Footballer – How Much Do Nigerian Footballers Earn
Pingback: Nigeria's business conditions worsen due to sluggish PMI - Otownloaded