StanChart: Nigeria’s business sentiment rises by 2.5%

Business sentiments in the country rose by 2.5 per cent to 62.2 per cent in July, Standard Chartered Bank’s Business Sentiment Indicator (BSI) has said.In a note made available to the New Telegraph, the lender stated that this is the highest level of business confidence recorded by the BSI since December 2014, noting that it “points to a post-election recovery.” Attributing the increase to higher orders and production, the bank, however, pointed out that the recovery is tentative, as only seven out of its 15 future expectations indicators rose in the month under review.

The survey said: “The Standard Chartered-MNI Business Sentiment Indicator (BSI) for Nigeria increased to 62.2 in July, rising 2.5 per cent m/m from June. Two of the headline components, production and new orders, led the increase, while three components of the headline BSI index (order backlogs, employment and supplier delivery times) fell. This was the highest print for our BSI since December 2014. “Although uncertainty persists due to new oil-price weakness, fiscal pressure, and constrained FX availability, the results appear consistent with a growth recovery in H2-2015. Notably, the three-month average of the BSI edged up to 61.4 in the three months to July, from 59.2 in Q1- 2015. While this points to some improvement in economic momentum post-election, future expectations are not robust.

Only seven out of 15 future expectations indicators increased in July.” Significantly, the bank noted that despite rising orders, businesses in the country still report that foreign exchange market conditions are hindering their prospects. “In July, businesses have experienced the impact of new Central Bank of Nigeria (CBN) restrictions on imports, with FX from Nigerian markets no longer available for the importation of a number of items.

Future expectations fell 18 per cent m/m in July, demonstrating that Nigerian businesses do not expect FX market conditions to improve significantly near-term. This pessimism was tempered by expectations that credit conditions would improve, with expectations for the ‘availability of credit’ indicator reaching a new series high of 64.6 in July,” it stated.