• Monday, May 27, 2024
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Nigeria’s unemployment rate in focus as US rate hold looms

Nigeria’s unemployment rate in focus as US rate hold looms

By Eniola Olatunji and Wasiu Alli

Nigeria’s unemployment rate stood at 5.0 percent in Q3, as Nigeria’s Bureau of Statistics is expected to give the full-year report Monday.

Meanwhile, the U.S. The Federal Reserve is expected to hold interest rates steady.

This decision by the world’s largest economy could have ripple effects on global markets, including currency exchange rates and investor confidence, which in turn could impact Nigeria’s economy.

Read also: Pension savings become immediate lifeline with rising unemployment in Nigeria

Monday April 29, 2024:

Nigeria Labour Force Survey Report Full Year 2023

The NBS will release a report on the Nigeria Labour Force Survey for the full year 2023.

The labour force participation rate measures the share of a country’s working-age population that is in the labour force.

In the third quarter of 2023, the Nigeria Labour Force Survey showed that the unemployment rate rose to 5.0 percent from 4.2 percent in the previous quarter.

It stood at 4.1 percent in the first three months of 2023, down from 5.3 percent in Q4 of 2022.

The percentage of self-employed Nigerians declined to 87.3 percent in the third quarter of 2023 from 88.0 percent in the previous quarter. Wage employment rose to 12.7 percent from 12.0 percent.

“Informal employment in Nigeria and other developing countries seems to be very high when compared to developed countries. The share of employed persons in informal employment was 92.3 percent in Q3, a reduction of 0.4 percent when compared to 92.7 percent in the previous quarter,” the report said.

Experts say the decline in self-employment in Nigeria, also known as a ‘hustle economy’, shows that businesses are shutting down, thereby threatening the country’s entrepreneurship growth and development.

“The reduction in self-employment is an indication that more businesses are going down, particularly the micro and nano ones, which are run as self-employment as a result of harsh economic realities,” Femi Egbesola, national president of the Association of Small Business Owners of Nigeria, said.

 “Experts say the decline in self-employment in Nigeria, also known as a ‘hustle economy’, shows that businesses are shutting down, thereby threatening the country’s entrepreneurship growth and development.”

Thursday, May 1, 2024:

US rate decisions

The US Federal Open Market Committee (FOMC) will meet on Thursday to decide where to set the target interest rate.

At the start of the year, experts had been forecasting a series of interest rate cuts in the US.

However, US economic data suggests otherwise. Its GDP growth came in at a sluggish 1.6 percent in the first quarter of 2024, its slowest pace in nearly two years, falling short of expectations. Inflation also turned out higher than expected, at 3.5 percent, up from 3.2 percent in February.

This combination of slowing growth and persistent inflation raises the risk of stagflation, a scenario the Federal Reserve is desperately trying to avoid.

The key US interest rate is between 5.25 percent and 5.5 percent, the highest level in more than 20 years.

Bloomberg projects that the Fed will continue to hold rates at 5.5 percent.

Traders watch interest rate changes closely, as relative short-term interest rates are a primary factor in currency valuation.

A reading that is stronger than forecast is generally supportive and positive for the USD, while a weaker than forecast reading is generally negative for the USD.

Read also: How unemployment fuels cybercrime in Nigeria

March Purchasing Managers’ Index (PMI)

The Purchasing Managers’ Index (PMI) for March will be released on Thursday.

In February, the index declined to 51.0 from 54.5 in January. Readings above 50.0 signal an improvement in business conditions, while those below show deterioration.

This meant that business activity in Nigeria dropped to the lowest in three months in February 2024, largely on the back of the weakness of the naira.

“Price pressures intensified in the Nigerian private sector during February and were unprecedented in over a decade of data collection. Both input costs and output prices increased at the sharpest rates on record, with rising prices impacting demand,” the index report said.

However, after losing 43 percent of its value against the dollar earlier this year, the naira strengthened by over 34 percent in March, the highest gain among global currencies.

Friday May 3, 2024:

US unemployment rate

The US Bureau of Labour Statistics will be releasing its unemployment data for April 2024.

In March, unemployment rates dropped to 3.8 percent from 3.9 percent in February, a two-year high.

The jump in the unemployment rate in February, after holding at 3.7 percent for three straight months, reflected a further decline in household employment. The mixed report boosted the odds of the Federal Reserve cutting interest rates by June.

The unemployment rate measures the percentage of the total workforce that is not working yet actively seeking employment.

A reading that is higher than forecast is generally negative for the USD, while a lower than forecast reading is generally supportive for the USD.

Naira to maintain a steady fall amid increased dollar supply

The naira, Nigeria‘s currency, has continued to fall across official and unofficial foreign exchange (FX) as speculators scoop dollars amid increased supply.

The naira traded on Friday with the dollar selling at N1,430 on the parallel market, representing a 2.09 percent depreciation against N1,400 quoted on Thursday on the black market.

At the official FX market, known as the Nigerian Autonomous Foreign Exchange Market (NAFEM), the naira closed flat as the dollar was quoted at N1,309.88 on Friday, weaker than N1,308.52 closed on Thursday, according to the data from the FMDQ Securities Exchange.

“The naira has become volatile again. As it is now, the currency may hit N1,500 this week, buoyed by the increased dollar supply in the market,” a financial analyst told BusinessDay.

Read also: Entrepreneurship will reduce rising unemployment in Nigeria

“There are indications of a multiple exchange rate because, as of April 24, CBN sold the dollar for N1,330.44/$; BDC sold theirs for N1,036.32/$ while it was sold for N1,380/$ on the street,” a source said.