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Economic activities decline amid recession fears

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CBN headquarters building

CBN headquarters building

Respite for the troubled economy seems nowhere in sight, as the monthly survey of the Statistics Department of the Central Bank of Nigeria (CBN) shows sustained decline in activities.The latest survey, Purchasing Managers Index (PMI), again recorded declining levels of production, new orders, employment and raw material inventories, in the build up to the release of the second quarter Gross Domestic Product (GDP).

Specifically, the manufacturing index, which rose marginally to 44.1 index points in July 2016, compared to 41.9 in June, is still below the basic level.Meanwhile, the Federal Government has concluded plans to raise N245.18bn worth of Treasury Bills, with maturities ranging from three months to one year.

The Central Bank of Nigeria (CBN), which will act on behalf of government, is billed to issue N45.18bn for three-month debt; N80bn for six-month bill; and N120bn for one-year instrument. All will be through the Dutch auction system.

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Already, indications show that the rates for the instrument might be 16 per cent for the three-month; 18 per cent, six months and 18.5 per cent, one-year bills.Recently, yields on fixed income securities have been rising, with the Central Bank mopping up naira liquidity in efforts to lure foreign investors who sold naira assets as a result of the oil price crisis.

CBN also raised interest rates by 200 basis points last week from 12 per cent to 14 per cent, to help fight inflation, which hit a 10-year high of 16.5 per cent in June.
Similarly, the local currency ended yesterday’s transactions at N310.50 per dollar, stronger than Friday and Monday’s close of N321.16 and N315.5, respectively.

The naira earlier traded $23m at N280.50 per dollar, rising to a high of N316.50, before adjusting to N310.5.Of the 16 manufacturing sub-sectors, 13 recorded   decline in the review month, led by electrical equipment; primary metal; nonmetallic mineral products; furniture   and related products; fabricated metal products; printing and related support activities; and food, beverage and   tobacco products.Others include textile, apparel, leather and footwear; paper products; petroleum and coal products; plastics   and rubber products.transportation equipment; and   chemical and pharmaceutical products, while appliances and components sub-sector recorded no change.

At 43 index points, the production level index for   manufacturing sector declined for the seventh consecutive month, although at a slower rate than in June 2016. Again, out of the 16 manufacturing sub‐sectors, 12 recorded declines in production level during the review   month, led by primary metal; plastics and rubber products; printing and related support activities; furniture and related products; appliances and components; and nonmetallic mineral products, among others.


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