Nigeria’s real sector continued to expand in May, signalled by the Central Bank of Nigeria’s Business Expectations Survey Report for the period. According to the reading, respondent firms’ optimism in the macroeconomy remained positive at 28.9 points, driven by the services, industrial, construction and wholesale/retail trade sectors.
Furthermore, respondents’ outlook on working capital and average capacity utilization improved, as the indices stood at 14.1 and 22.7 index points respectively, compared to the 8.5 and 20.0 points respectively recorded in April 2018. Notably, the businesses outlook for June 2018 shows a greater confidence in the macroeconomy at 65.5 index points.
In terms of business constraints, firms identified insufficient power supply, unfavourable economic climate, high-interest rate, unclear economic laws, financial problems, unfavourable political climate, and insufficient demand as the major factors constraining business activity – all of which foreshadows the lacklustre May PMI reading that as recorded. Also worth mentioning, we observed that the sectors that witnessed improved business sentiments were sectors that printed
underwhelming GDP numbers in Q1-18, such as the Services sector (-0.5%y/y), dragged by weaker growth in the Trades (-2.6%), Construction (-1.5%) and Real Estate (-9.4%) sub-sectors. Consequently, we expect to see improvements in these sectors Q2-18 GDP.