The fourth quarter (Q4) 2016 Business Expectation Survey has indicated that at 46.5 index points, the positive outlook in the volume of business activities reflects prospects for expansion in the first quarter of 2017.
Also, the employment index stood at 23.4 points, indicating a favourable outlook. The employment outlook index by sector, showed that the services sector (10.4 per cent) had higher prospects for creating jobs, followed by the wholesale/retail trade (5.7 per cent), industrial (4.5 per cent) and construction (2.7 per cent) sectors.
The Central Bank of Nigeria (CBN), revealed this in a report posted on its website.
The Q4, 2016 Business Expectations Survey (BES) was carried out during the period October 24th to November 04th 2016 with a sample size of 1,950 business enterprises nationwide. A response rate of 99.5 per cent was achieved during the reporting quarter, and covered the Industry, Construction, Wholesale/Retail Trade and Services sectors.
The survey was conducted from the updated survey frames of both the CBN and the National Bureau of Statistics (NBS). The survey response rate was 99.5 per cent in the quarter under review.
Respondents were drawn from the Industrial, Construction, Wholesale/Retail trade and Services sectors. The Services sector is made up of Financial Intermediation, Hotels and Restaurants, Renting & Business activities and Community & Social Services.
The distribution of firms by sector showed that services sector constituted the highest number of respondents (35.3 per cent), followed by wholesale/retail (26.2 per cent), industrial (24.3 per cent) and construction (14.2 per cent).
Continuing, a further analysis of businesses with expansion plans by sector in the next quarter showed that the wholesale/retail trade indicated disposition for expansion with an index of 61.0 points. Similarly, construction, services and industrial sector firms indicated expansion plans for Q4, 2016 with indices of 58.3, 56.5 and 55.3 points, respectively.
The surveyed firms identified insufficient power supply (62.4 index points), financial problems (55.6 index points), high interest rate (53.8 index points), unfavourable economic climate (52.7 index points), competition (44.1 index points), unclear economic laws (43.5 index points), unfavourable political climate (38.5 index points), access to credit (37.3 index points) and insufficient demand (36.5 index points) as the major factors constraining business activity in the current quarter.
Also, a breakdown of the respondents by type of businesses showed that 13.8 per cent were import-oriented, 2.0 per cent were export-oriented, 7.8 per cent were both import and export-oriented, and 76.4 per cent were neither import- nor export-oriented (Table 2, sections 16). The distribution of firms by employment size showed that small size firms constituted 81.3 per cent of responses, medium size firms 14.2 per cent, and large size firms 4.5 per cent.
The overall confidence index (CI), which stood at –29.0 points in Q4 2016, indicated respondent firms’ pessimism on the macro economy, however at 32.2 points, the overall CI points to greater confidence on the macro economy in the next quarter.
The pessimistic outlook of respondents in the current quarter was driven by the opinion of respondents from services (-9.4 points), industrial (-7.9 points), wholesale/retail trade (-7.5 points) and construction (-4.2 points ) sectors. Conversely, the expected drivers for the optimism on the macro economy in the next quarter are services (12.3 points), wholesale/retail trade (8.4 points), industrial (6.5 points) and construction (4.0 points) sectors.
Also, the drivers (by type of business) of the pessimism on the macro economy in the current quarter were “neither importer nor exporter” (-22.0 per cent), followed by “importer” (-3.9 per cent) and ‘both importer & exporter” (-2.8 per cent). In addition, the drivers (by size of business) of the pessimism on the macro economy in the current quarter were the small (-23.7 per cent), medium (-4.3 per cent) and large (-1.0 per cent).
” The financial condition index in the current quarter stood at -17.6 per cent and was driven by the wholesale/retail trade (-5.5 points), industrial (-5.1 points), services sector (-4.0 points) and construction (-3.0 points) sectors.
“Respondents’ pessimism in the volume of total order and internal liquidity positions (financial conditions), dampened the volume of their business activities in the current quarter. Similarly, respondents pessimism on access to credit, further lessened their internal liquidity positions in the review quarter,” the report added.