The outcome of a survey conducted by the Central Bank of Nigeria (CBN) in the month of July shows overall confidence index (CI) on the macro-economy in July 2018 worsened from levels obtained a month earlier as businesses identify insufficient power supply as the biggest constraint.
This is at variance with June’s findings, which showed greater confidence in the macro-economy at 64.9 index points.
At 13.6 index points, respondents’ overall confidence index (CI) in July 2018 declined when compared with the level of 34.7 index points recorded June 2018.
According to the CBN, businesses outlook for August 2018 show more confidence on the macro-economy at 58.7 index points.
The results released in the monthly business expectations survey report of the CBN indicates that outlook from nationwide respondents on the volume of total order, business activity and financial conditions (working capital) remained positive during the review period.
The respondents, who work in firms cutting across the services, industry, wholesale/retail trade and construction sectors, identified insufficient power supply, high-interest rate, unfavourable economic climate, financial problems, unclear economic laws, insufficient demand and unfavourable political climate as the major factors constraining business activity in the current month.
The CBN equally noted that respondent firms expect the naira to appreciate in the current and next months; inflation rate to fall in both months, and borrowing rates to rise in the current month and fall in the next month.
The employment outlook index by sector showed that the services sector (28.8 points) indicates the highest prospects for creating jobs, followed by wholesale/retail trade (22.2 points), construction (20.5 points), and industrial (17.1 points) sectors.
An analysis of businesses with expansion plans by sector in the next month showed that the wholesale/retail trade indicates greater disposition for expansion with an index of 31.8, followed by the services and construction sectors with 28.7 and 8.8 index points respectively
On business constraints, the surveyed firms identified insufficient power supply (64.1 points), high interest rate (58.1 points), unfavourable economic climate (54.3 points), financial problems (50.6 points), unclear economic laws (48.9 points), insufficient demand (45.1 points) and unfavourable political climate (45.1 points) as the major factors constraining business activity in the current month.
The businesses expectations on exchange rate show that majority of the respondent firms expect the naira to appreciate in the current and next month’s as the confidence indices stood at 27.3 and 44.8 points, respectively.
Respondent firms also expect the inflation rate to fall in both the current and next months, with confidence indices of -6.9 and -15.0 points for the current and next months, respectively
However, respondent firms expect borrowing rates to rise in July but decline in August 2018, as the confidence indices stood at 5.6 and -0.9 points, respectively.