Nigeria: Business confidence improves in May
May 31, 2016
In May, the Standard Chartered-MNI Business Sentiment indicator (BSI) rose from April’s 52.6 to 54.5. As a result, the index is further above the 50-threshold that separates contraction from expansion in business conditions. That said, despite the increase, the index only recovered some of the ground lost since the start of the year.
May’s improvement mainly reflected gains in new orders, production, job prospects and order backlogs. Supplier delivery times was the sole category to experience a deterioration. Standard Chartered analysts point out that, “Nigeria’s Q2 economic performance is likely to be just as bad [as in Q1], if not worse. The three-month average as of May was just 52.8. Recent pipeline attacks by Niger Delta militants have led to a drop in oil production to as low as 1.4mbpd, from 2.1mbpd in Q1. This will likely weigh even further on oil sector growth in Q2.” On the upside, analysts stated that the recent announcement by the Central Bank hinting at the introduction of some flexibility in the exchange rate regime, “could lead to an improvement in economic activity and improved FX availability.”