This reading rose healthily in June, from 48.5 to 52.5. The improvement was seen across all company sizes, and the proportion of respondents reporting no change eased from 77% in May to 73%. There have been recent steps by the FGN to create a more business friendly environment. One such is the 60-day National Action Plan by the Presidential Enabling Business Environment Council; small and medium-sized enterprises stand to benefit from this initiative. An improved operating environment would allow companies to rejig and most likely take on additional labour.
The labour force report from the NBS for Q4 2016 shows a pick-up in the national unemployment rate from 13.9% in Q3 to 14.2%. A total of 28.6 million people were either unemployed or underemployed in a labour force of 108.6 million.
The reading for new orders, the most forward-looking of the five sub-indices, showed a rise from 52.5 to 55. This was wholly driven by small companies whereas the responses of the large and medium-sized firms told the story of a slight deterioration. This could be because SMEs are seeing more fx as a result of dedicated CBN sales. No change was the response of 50% of firms.
Respondents under the model of our choice (the ISM’s in the US) are not asked to distinguish between domestic and export orders. According to the CBN, non-oil products accounted for just 7.1% of total exports in Q4 2016. Additionally, the foreign trade statistics for Q4 2016 from the NBS show that Nigeria exported goods (presumably non-oil products) valued at N464bn to other African countries; exports to ECOWAS countries accounted for half of this figure.
Manufacturing exporters will have noted the signals that the FGN plans to reintroduce the export expansion grant (EEG). The Manufacturers Association of Nigeria, following discussions with the authorities, thinks that the new grant may have lower rates than previously, be robustly designed to prevent abuse by applicants and reward exporters for value addition. We should add that the FGN’s announcement in December on its uncovering of N2.2trn in unpaid debts from the previous administration to the private sector includes arrears to exporters, which are likely to be obligations under the old EEG.
This question is inverted for respondents (i.e. a fall in delivery times is a positive indicator). In June the reading declined from 64 to 60.5, the only one of the five sub-indices to post a fall. The decline was pronounced for medium-sized forms. This reading has been in positive territory since February 2015 and averaged 57.4 over the past 12 months.
A significant improvement from 53 to 57.5 was observed, led by small companies. No change accounted for 45% of all replies, compared with 50% the previous month.