Daily Watch – PMI rebounds in August, S’Africa’s current account improves

Nigeria’s economic activities showed signs of recovery in August, marking the first expansion after 13 consecutive months of contraction. The Purchasing Managers’ Index (PMI) for the month stood at 50.2 points, disclosed by the Central Bank of Nigeria (CBN) in its August PMI survey report released on Thursday. Modest growth was driven by a combination of factors, including increases in output (50.8), new orders (50.5), and raw materials stock (51.3), while the employment index at 48.7 points highlights labour market weaknesses. The services sector expanded for a third month, and agriculture recovered to 50.5 points in August after three months of contraction. However, the industry sector remained in decline at 49.2 points for the seventh straight month.

The Federal Government has predicted five-day rainfall that may lead to flooding in 21 states and 123 locations. It also listed seven states that will likely be severely affected. They are Benue, Kogi, Anambra, Delta, Imo, Rivers and Bayelsa states. The flood prediction obtained on Thursday from the Environment Ministry’s National Flood Early Warning Systems Centre also warned communities downstream of River Benue to take caution. The Federal Government said the identified locations and environs would likely witness rainfall that may lead to flood from 4- 8 September 2024. Meanwhile, the National Emergency Management Agency has advised states in the central and southern parts of the country to prepare ahead of potential floods that may soon affect communities downstream.

Ghana invited holders of roughly $13 billion of its international bonds to swap their holdings for new instruments on Thursday. Bondholders have until 30 September to accept the offer though those who agree to do so before an early deadline on 20 September will be eligible for a 1% consent fee, the government said in its “exchange offer and consent solicitation” published in a regulatory statement on the London Stock Exchange. A committee of Ghana’s international bondholders said in a statement that it supported the restructuring offer. A regional group representing holders of over 25% of the bonds also said in a statement they supported the offer. The new bonds will be issued on 9 October, the government statement said. The agreement will have Ghana’s bondholders forgo $4.7 billion in loans and provide $4.4 billion in cash flow relief until the International Monetary Fund programme ends in 2026.

South Africa’s current account deficit narrowed in the second quarter, to 0.9% of Gross Domestic Product (GDP) from 1.5% of GDP in the first quarter, central bank data showed on Thursday. The country’s current account deficit narrowed to 64.6 billion rand in April-June, from 106.9 billion rand in the previous three-month period. The trade surplus widened to 187.4 billion rand in Q2 from 165.8 billion rand in Q1. “The increase in the value of exports of goods and services in the second quarter of 2024 reflected higher prices while the increase in imports of goods and services reflected both higher volumes and prices,” the South African Reserve Bank said. South Africa’s Q2 economy grew 0.4%, helped by consumer spending and power supply, but output declines in agriculture, mining, and transport meant growth was slightly weaker than expected.