• Brazil released vigorous job market figures on Tuesday, April 30, reinforcing views of stronger economic activity at the beginning of this year, but keeping the central bank wary of potential impacts on inflation.
• Both the unemployment rate and formal job creation figures in Latin America's largest economy came in better than expected in their March readings, maintaining a positive trend that has excited the government and spooked policymakers.
• Brazil's jobless rate stood at 7.9% in the January-March period, according to statistics agency IBGE, slightly up from the 7.8% seen in the previous rolling quarter, but still the lowest for a quarter through March since 2014. However, the rate was below the 8.1% expected by analysts polled by Reuters in a period in which unemployment is seasonally higher.
• "Today's data indicate that we might see new adjustments in GDP growth projections as well as concerns about services inflation," Kinitro Capital economist Joao Savignon said. "They continue to portray a tight job market." "Real wages continue to grow at a relatively solid pace, leading to services inflation remaining uncomfortably high," Pantheon Macroeconomics' chief Latin America economist, Andres Abadia, said.
• Brazil's central bank, which is set to make its next monetary policy decision next week, has emphasized that it is closely monitoring the dynamics of income from various surveys to better assess the degree of slack in the labour market and its potential impacts on service sector inflation.
• The central bank has lowered its key borrowing rate by 50 basis points at each of its last six meetings, to 10.75%, and signalled in March another cut of the same magnitude in May. However, Governor Roberto Campos Neto recently said policymakers could no longer provide guidance on policy decisions due to increased uncertainties, with some believing the easing pace may be reduced.

(Source: Reuters)

• U.S. labour costs increased more than expected in the first quarter amid a rise in wages and benefits, confirming the early-year inflation surge that will likely delay a much-anticipated interest rate cut later this year.
• The pick-up in labour costs reported by the Labor Department on Tuesday was despite signs of some easing in labour market conditions as supply rises.
• The Employment Cost Index (ECI), the broadest measure of labour costs, increased 1.2% last quarter after rising by 0.9% in the fourth quarter, the Labor Department's Bureau of Labor Statistics said.
• Economists polled by Reuters had forecast the ECI would advance 1.0%. Labour costs increased 4.2% year-on-year after rising by the same margin in the fourth quarter. They have declined from a peak of 5.1% at the end of 2022. Some economists blamed the quarterly rise in wages on challenges adjusting the data at the start of the year for seasonal fluctuations.
• Wages increased 1.1% in the January-March quarter after advancing by the same margin in the prior three months. They jumped 4.4% year-on-year after rising 4.3% in the fourth quarter. Private sector wages rose 1.1% after gaining 1.0% in the prior quarter. They gained 4.3% in the 12 months through March. Wage gains remain above their pre-pandemic levels.
• Productivity, however, decelerated in the first quarter based on last week's gross domestic product report. First-quarter productivity data is due to be published on Thursday.
• According to Conrad DeQuadros, senior economic advisor at Brean Capital, the growth rate of productivity is important in assessing how fast employment costs can increase without pressuring inflation or profit margins. But if residual seasonality depresses GDP and productivity in the first quarter it will likely overstate increases in unit labour costs.

(Source: Reuters)

• The U.S. Federal Reserve held interest rates steady on Wednesday and signalled it is still leaning towards eventual reductions in borrowing costs, but put a red flag on recent disappointing inflation readings and suggested a possible stall in the movement towards more balance in the economy.
• Fed Chair Jerome Powell said it was likely to take longer than previously expected for U.S. central bank officials to gain the "greater confidence" needed to kick off interest rate cuts.
• Nevertheless, Powell said he still expects inflation to ease over this year. "That's my forecast," he said. "I think my confidence in that is lower than it was because of the data that we've seen."
• The Fed's latest policy statement kept key elements of its economic assessment and policy guidance intact, noting that "inflation has eased" over the past year, and framing its discussion of interest rates around the conditions under which borrowing costs can be lowered.
• "The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably towards 2%," the Fed repeated in a unanimously-approved statement that still indicated the next move on rates will be down. This continues to leave the timing of any rate cut in doubt, and Fed officials made emphatic their concern that the first months of 2024 have done little to build the confidence they seek in falling inflation.

(Source: Reuters)

• The Jamaica Special Economic Zone Authority (JSEZA) continues to make positive strides in the development of Jamaica’s resilient Logistics Hub Initiative. This strategic endeavour is poised to revolutionise the region’s economic landscape by leveraging Jamaica’s geographic location and fostering collaboration among Caribbean nations.
• On a recent Jamaica Information Service (JIS) ‘Get the Facts’ television programme, the agency’s Chief Executive Officer (CEO), Kelli-Dawn Hamilton, pointed out that coupled with its resilient spirit, Jamaica’s location along the major global shipping routes, positions it as a significant player on the world stage.
• Hamilton said by embracing concepts such as ‘friendshoring’^[1] and coopetition, Jamaica is fostering synergistic relationships within the Caribbean Community (CARICOM), “because we’ve recognised as countries that we can’t go it alone. We must work together to leverage our competitive advantages”.
• Integral to the success of the Logistics Hub, the Initiative has also extended its benefits beyond established businesses to empower local entrepreneurs and suppliers, catalysing a ripple effect of economic opportunities throughout the island.

(Source: JIS)

 ^[1] 'Friendshoring' is a growing trade practice where supply chain networks are focused on countries regarded as political and economic allies.

• Fitch Solutions expects that real GDP growth in Latin America (LATAM) will cool from 2.2% in 2023 to 1.8% in 2024. LATAM’s growth will trail well behind the global emerging market average of 3.8% in 2024.
• The growth slowdown in 2024 will largely be driven by Brazil (2.9% in 2023 to 2.1% in 2024) and Mexico (3.1% to 2.5%), the two largest markets in the region, due to moderating exports and the lagged impact of elevated interest rates.
• By contrast, Chile (0.2% to 1.8%), Colombia (0.6% to 1.3%) and Peru (-0.6% to 1.9%) will see growth rebounds.
• Fitch also expects that regional central banks will continue to cut interest rates throughout 2024, after being the first in the world to begin easing in 2023, albeit constrained by the timing of rate cuts in the US.
• That said, there are risks to the outlook. Fiscal deficits will remain high in several markets, amplifying FITCH’s concerns about policy direction. With leftist leaders in power and as general frustration with the status quo grows, it could lead to swings from right to left given that voters will go to the polls in several countries this year in what is being dubbed a “super election cycle” globally.
• Additionally, poor productivity, high levels of corruption and elevated public debt will all be limiting factors, despite Latin America’s commodity riches and growing labour force driving growth.

(Source: Fitch Solutions, NCBCM Research)

• Guyana has signed a security agreement with Suriname and French Guiana that Georgetown says marks a pivotal step towards enhancing cooperation and addressing shared security challenges.
• A statement issued by the Ministry of Home Affairs said that the “Common Security Master Plan” will bolster regional security and defence and followed “a day of intensive dialogue” among Guyana, Suriname, French Guyana and Brazil on Monday.
• “The dialogue highlighted the critical importance of a unified approach to understanding the regional strategic defence and security environment. Emphasis was placed on collaborative efforts to combat security threats and address challenges affecting the populations, territories, maritime space, and interests of the countries,” the ministry said
• It said that the signing of the Common Security Master Plan marks a significant milestone in the collective efforts of Guyana, Suriname, Brazil and French Guiana to ensure the safety and well-being of their citizens and territories.
• “This collaboration underscores the commitment of the nations to regional security cooperation and paves the way for a more secure and prosperous future,” the statement added.
• This comes at a time when Guyana continues to face security threats, including the threat of annexation, from its neighbour Venezuela over the ruling and control of its oil-rich western territory, the Essequibo region. On April 3, 2024, Venezuela’s President, Nicolás Maduro, passed a law declaring the border region of Essequibo, which belongs to Guyana, a Venezuelan federal state. This resulted in Guyana meeting with the UN Security Council in private on April 9, to discuss the developments regarding the territorial dispute between the two countries and to reiterate the country’s commitment to a peaceful solution to the border dispute.

(Sources: St. Vincent Times & NCBCM Research)

• The U.S. Treasury said on Monday it expects to borrow US$243.0Bn in the second quarter of 2024 (Q2 2024), US$41.0Bn more than the January estimate. This was largely due to lower cash receipts, partially offset by a higher cash balance at the beginning of the quarter.
• The Q2 2024 financing estimate assumes a cash balance of US$750.0Bn at the end of June, the Treasury said in a statement. Attention now turns to Wednesday when the Treasury will detail its borrowing plans and auction sizes of various maturities.
• Treasury officials said on Monday the borrowing estimates assumed no change to the Fed's current US$60.0Bn per month roll-off of Treasuries. It also announced that it expects to borrow US$847.0Bn in Q3 2024, as it projects a cash balance of US$850.0Bn at the end of September.
• With yields near the highest in months, the market has been highly attuned to the supply of Treasuries as concerns mount over rapidly rising U.S. debt.
• The Federal Open Market Committee is expected to keep its benchmark rate unchanged on Wednesday at the end of its two-day meeting. Speculation is growing that the Federal Reserve will not pivot to easing rates until late this year, given the U.S. economic strength and inflation that is stuck above its target rate of 2.0%.
• At the same time, the Fed is expected to taper its quantitative tightening program soon, in which it lets bonds it bought during the pandemic mature without replacing them on its balance sheet. That will affect how much cash the Treasury needs to raise via Treasury bills.

(Source: Reuters)

• A growing number of Federal Reserve officials don't see a return to the ultra-low interest rates that prevailed before the COVID-19 pandemic due to everything from ballooning federal deficits to demand for investments in green energy, artificial intelligence and domestic manufacturing.
• The U.S. economy has held up remarkably well in the face of the stiffest rate hikes in a generation, with unemployment low and growth mostly above trend until recently. Meanwhile, progress on returning inflation to the Fed's 2% target has stalled out this year after rapid gains last year, leading some to wonder whether something has changed that could require a generally higher level of interest rates to keep price increases in check.
• The heads of the Dallas and Cleveland regional Fed banks, for instance, sense something new is afoot. In April 2024, Dallas Fed President Lorie Logan, noted seven policymakers saw a longer-run policy rate of 3%, up from three with that view a year ago. Meanwhile, Cleveland Fed President Loretta Mester, raised her longer-run fed funds estimate "to reflect the continued resilience in the economy despite high nominal interest rates and higher model-based estimates of the equilibrium interest rate, R-star."
• To be sure, the shift seen in March's projections was small, and some like Fed Chair Jerome Powell cautioned against reading too much into it at this stage. Likewise, New York Fed President John Williams, a leading researcher into the R-Star concept has contended he expects a return to a low-rate world at some point.

(Source: Reuters)

• In a release to the Jamaica Stock Exchange, Supreme Ventures Limited advised that Game Park Limited, partner to its Ghanaian subsidiary, IBet SV Ghana Ltd was granted a ten (10) year lottery licence by the National Lottery Authority (NLA) in Ghana . IBet SV Ghana exclusively provides technical services to Game Park.
• The granting of this licence follows Game Park Limited satisfying the obligations under the one year provisional licence as a Third-Party Collaborator to operate a lottery in that country.
• The company noted that its partnership in Ghana marks a significant and historic milestone in its expansion strategy. By leveraging its Gaming Laboratories International (GLI) certified proprietary software and best-in-class live draws, SVL is aiming to bring its gaming products and technology to other parts of Africa and eventually other jurisdictions around the world.
• In Ghana, lottery revenue is expected to show a compound annual growth rate of 7.86% between 2023 and 2027. Additionally, formalised sports lottery popularity is growing rapidly in Ghana, especially amongst the male populace. One study found that 96% of males engaged in sports lottery in Ghana were within the age bracket of 21-40 years, which makes online lottery and mobile penetration a good strategy to attract and maintain this segment.
• This bodes well for SVL’s reach, scale and revenue growth opportunities as the company is now able to sell its products in this significantly larger market of 34Mn people.

(Sources: JSE, SVL Annual Report and NCBCM Research)

• According to data on the Producer Price Index (PPI) released by the Statistical Institute of Jamaica (STATIN), the Mining & Quarrying Index increased by 0.8% in March, while prices in the Manufacturing industry inched up 0.1%.
• The 'Bauxite Mining & Alumina Processing' category was the main driver for the 0.8% decline in the index for the Mining & Quarrying industry. The index for the other major group, ‘Other Mining and Quarrying’ moved up by 0.2%. These increases were due to the depreciation of the Jamaican dollar vis-à-vis the United States dollar.
• The increase in the Manufacturing industry was mainly due to increases in the index for the major groups: ‘Food, Beverages & Tobacco’ (0.2%) and ‘Refined Petroleum Products’ (0.6%), due mainly to higher fuel prices on the international market.
• For the period March 2023 – March 2024, the index for the Mining & Quarrying industry declined by 7.1%. This was a result of a 7.5% fall in the index for the major group, ‘Bauxite Mining & Alumina Processing’.
• However, for the same point-to-point period, the Manufacturing industry index increased by 2.2%. Contributing to this increase were the major groups: ‘Refined Petroleum Products’ (7.7%) and ‘Food, Beverages & Tobacco (1.6 %)’.
• Geopolitical tensions in Europe and the Middle East pose risks that could disrupt the oil supply and supply chain, which could result in higher costs for producers.
• The Producer Price Index (PPI) is a significant economic indicator that tracks the average fluctuation in selling prices that domestic producers of goods and services experience over time.

(Sources: STATIN and NCBCM Research)