• US consumer price index accelerated at a faster-than-expected pace in March, pushing inflation higher and likely dashing hopes that the Federal Reserve will be able to cut interest rates anytime soon.
• The CPI, a broad measure of goods and services costs across the economy, rose 0.4% for the month, putting the 12-month inflation rate at 3.5%, or 0.3 percentage points higher than in February, the Labor Department’s Bureau of Labor Statistics reported Wednesday. Economists surveyed by Dow Jones had been looking for a 0.3% gain and a 3.4% year-over-year level.
• Excluding volatile food and energy components, core CPI also accelerated 0.4% on a monthly basis while rising 3.8% from a year ago, compared with respective estimates for 0.3% and 3.7%.
• Energy rose 1.1% after climbing 2.3% in February, while shelter costs, which make up about one-third of the weighting in the CPI, were higher by 0.4% on the month and up 5.7% from a year ago. Expectations for shelter-related costs to decelerate through the year have been central to the Fed’s thesis that inflation will cool enough to allow for interest rate cuts.
• Increasing inflation was also bad news for workers, as real average hourly earnings were flat on the month and increased just 0.6% over the past year, according to a separate BLS release. The report comes with markets on edge and Fed officials expressing caution about the near-term direction for monetary policy. Central bank policymakers have repeatedly called for patience on cutting rates, saying they have not seen enough evidence that inflation is on a solid path back to their 2% annual goal. The March report likely confirmed worries that inflation is stickier than expected.
• Markets had expected the Fed to start cutting interest rates in June, with three reductions in total expected this year, but that shifted dramatically following the release. Traders in the fed funds futures market pushed expectations for the first cut out to September, according to CME Group calculations.
• Multiple Fed officials in recent days have expressed skepticism about lowering rates. Atlanta Fed President Raphael Bostic told CNBC that he expects just one cut this year, likely not coming until the fourth quarter. Governor Michelle Bowman said an increase may even be necessary if the data does not cooperate. Further, Liz Ann Sonders, chief investment strategist at Charles Schwab opined that “There’s not much you can point to that this is going to result in a shift away from the hawkish bent” from Fed officials. As such, in her view, a June cut is “definitively off the table.”

 (Source: CNBC)

• The NFIB's Small Business Optimism Index reaching its lowest level in over a decade signals significant concerns among small-business owners. This decline reflects a combination of factors impacting the economic landscape, including inflationary pressures and uncertainties surrounding market conditions.
• The report highlights a notable uptick in worries about inflation among small-business owners. With 25% of respondents citing it as their primary concern, this reflects the tangible impact of escalating input costs and rising wages on businesses' bottom lines. The consequent increase in average selling prices underscores the efforts of businesses to offset these inflationary pressures.
• Despite broader job growth in March, small businesses are facing challenges in recruitment. This is particularly evident in sectors such as transportation, construction, and services, where there is a pronounced scarcity of both skilled and unskilled labour. This shortage not only impedes business operations but also suggests potential constraints on further economic expansion.
• The persistently high inflation, which exceeds the Federal Reserve's target, raises questions about the central bank's response. There are anticipations that the Fed may opt to lower interest rates to counteract inflationary pressures and support economic stability. However, the timing and extent of such measures remain uncertain, leaving businesses in a state of flux as they navigate evolving monetary policies and economic conditions.

(Source: Reuters)

• Tourism Minister, Hon. Edmund Bartlett, has emphasised the importance of Jamaica’s Tourism Strategy and Action Plan (TSAP) in generating the stakeholder capacity to respond to the industry’s new architecture.
• He was speaking during the opening session of the Tourism Strategy and Action Plan Consultation Workshop for Kingston and St. Andrew, at the Spanish Court Hotel in New Kingston on Thursday (April 4).
• The TSAP, being executed through a partnership with the Inter-American Development Bank (IDB), is geared towards boosting socio-economic development and investment, building the local tourism industry’s resilience to climate change and reducing the sector’s contribution to climate change. It also aims to diversify Jamaica’s inbound tourism and promote the industry’s knowledge-based and technology-enabled development.
• Bartlett also highlighted the TSAP’s importance in making tourism more inclusive and more of an enabler of economic growth and development in Jamaica. He underscored the need to increase local production, which is critical in enabling Jamaica to retain a larger ratio of tourist dollars.
• Notably, with the tourism industry having already welcomed over 1 million visitors within the first two months of the year, it is progressing towards its ambitious goal of welcoming 5 million visitors and generating $5 billion in earnings by 2025.

(Sources: JIS and NCBCM Research)

• For the period January to November 2023, Jamaica’s total spending on imports was valued at US$6,982.0Mn, representing a 1.6% or US$113.5Mn decrease relative to last year, while earnings from total exports were valued at US$1,862.7Mn, 12.1% above export earnings in the corresponding 2022 period.
• Lower imports of “Raw Materials/Intermediate Goods” and “Fuels and Lubricants”, which declined by 5.0% and 13.9%, respectively, were the primary drivers of the reduction in imports.
• Meanwhile, an 86.5% increase in “Crude Materials (excl. Fuels) exports drove the export gains in overall exports from the island. Domestic exports increased by 12.0% to US$1,405.6Mn compared to US$1,254.9Mn for the 2022 period, while re-exports increased by 12.4% to value US$457.1Mn.
• A country’s total exports consist of both domestic and foreign goods, with the foreign goods being referred to as re-exports. Re-exports involve the exportation of foreign goods in the same state as previously imported, while domestic exports represent goods produced within the country.
• Jamaica’s overall trade deficit improved by 5.8% ($314.5Mn) compared to the corresponding period of the previous year, moving from $5,433.8Mn in 2022 to $5,119.3Mn.
• The value of imports for January to November 2023 from Jamaica’s five main trading partners, the United States of America (USA), China, Brazil, Japan, and Colombia, was US$4,282.1Mn or 61.3% of total imports. This represents a 1.3% decline compared to the US$4,339.1Mn spent for the corresponding 2022 period due largely to lower imports of “Mineral Fuels”.
• The top five destinations for Jamaica’s exports were the USA, Puerto Rico, Latvia, and the Russian Federation and Iceland. Export revenues from these countries increased by 10.9% to US$1,269.3Mn.

(Sources: STATIN and NCBCM Research)

• The Telecommunications Services of Trinidad and Tobago (TSTT) has announced plans to invest more than $160Mn in upgrading its network over the next 12 months. The announcement was made at its recent investor call to share its results for the quarter ended December 31, 2023,
• A new standard, which allows customers to make voice calls on their cellphones and surf the internet simultaneously at regular speeds, Is among the changes that TSTT hopes to introduce by next year.
• 'Over the next 12 months, TSTT will seek to improve nationwide connectivity as it prioritises enhancing customers' experience with its brands and suite of services. The company will direct a considerable amount of its efforts and resources towards enhancing its network, with the goal of building the nation's most advanced infrastructure with unsurpassed reliability and security. According to TSTT, the investment will go towards further deployment of LTE (Long-Term Evolution) at 80 additional sites and advanced wireless service (AWS) at 40 sites. This will ensure that customers always have access to the fastest data and the best call quality.
• TSTT said it is also actively testing VOLTE (Voice over LTE), with the anticipation it will be ready for rollout in the coming year.
• 'Moving forward, our sights are set on beefing up network reliability, bolstering brand trust, and fortifying TSTT's cybersecurity stance,' TSTT's acting chief executive officer Kent Western said. TSTT said it is well-positioned to sustain profitability while serving the growing needs of its customers and building a superior network to support it.

 (Source: Trinidad Express Newspapers)

• The government of Barbados may have to allocate millions of dollars to continue bailing out some cash-strapped state-owned enterprises (SOEs).
• A new Fiscal Risk Statement from the Ministry of Finance says there is evidence that several SOEs, including the Barbados Agricultural Development Marketing Inc. (BADMC), the Caribbean Broadcasting Corporation (CBC), and the Transport Board are likely to be short of cash and other liquid resources needed to pay their debts this year.
• The authorities say this means that “given the traditional reliance on Government to settle arrears of the SOEs in times where they have been cash-strapped, there is a high risk that these entities may require unbudgeted subventions during the fiscal year 2024/25”.
• In the 2024 Fiscal Risk Statement, which is a requirement of the Public Finance Management Act of 2019, the Ministry of Finance said “weak revenue growth for most commercial enterprises and a high reliance on Government subventions to meet operating expenses have meant consolidated net losses of commercial, public enterprises before subventions”.
• “A number of SOEs have been deemed insolvent as current assets are unable to cover liabilities. Additionally, some commercial entities’ revenues have not fully rebounded post-peak pandemic,” it reported.
• The bailing out of these SOEs would have the impact of increasing the amount of government expenditure and could impact the fiscal progress made by the sovereign through its BERT (Barbados Economic Recovery and Transformation) Program.
• Notably, for the nine months (April - December) of FY2023/24, the government recorded an overall deficit of $9.1Mn (-0.1% of GDP) due to higher global interest rates pushing up interest expenses on the country’s variable rate external debt along with increases in wages & salaries, as well as grants to public institutions. However, higher transaction-based tax receipts coupled with prudent non-interest spending allowed the authorities to meet its primary surplus target with a primary surplus of $434.3Mn (3.7% of GDP).

(Source: Nation New & NCBCM Research)

• Futures traders have significantly reduced their bets on the extent of rate cuts by the Federal Reserve this year, marking the lowest level since October, according to LSEG data. This shift suggests a more optimistic outlook on the economy's resilience and potential growth trajectory, prompting traders to adjust their expectations for monetary policy easing.
• The reduction in expectations for rate cuts by the Federal Reserve has led to an upward movement in Treasury yields, which are influenced by interest rate expectations. As investors anticipate less aggressive monetary policy accommodation, they demand higher yields on Treasury securities, leading to an increase in bond yields across various maturities.
• Federal Reserve policymakers have been cautious in their approach to rate cuts, particularly amidst concerns about sparking an inflationary rebound in an already strong economy. Despite calls for rate cuts, top officials, including Chair Jerome Powell, have emphasized the need for patience in deciding when to adjust interest rates, balancing the objectives of supporting economic growth and maintaining price stability.
• Market dynamics surrounding expectations of Federal Reserve rate cuts have undergone rapid shifts in recent months, reflecting evolving perceptions of economic conditions and policy responses. Traders are adjusting their positions in response to changing economic data and statements from Fed officials, contributing to increased volatility in financial markets as investors navigate uncertainties regarding the timing and extent of future monetary policy actions.

(Source: Reuters)

• Britain's construction sector experienced its first growth since August, with the S&P Global UK Construction Purchasing Managers' Index (PMI) rising to 50.2 in March, surpassing the growth threshold for the first time in seven months. This signals optimism for further growth ahead, supported by improving order books and expectations of easing borrowing costs.
• Despite a slight increase in costs, British construction companies saw the slowest pace of cost inflation in three months in March. However, employment contracted for the third consecutive month, reflecting ongoing concerns about margin pressures and client risk aversion.
• The all-sector PMI, encompassing services, manufacturing, and construction, inched down slightly to 52.6 in March. This suggests a modest slowdown in overall economic activity but still reflects ongoing weak growth following the recession in the second half of 2023.
• The expansion in the construction sector contributes to signs of improvement in the UK economy. Despite challenges, including employment contraction and modest economic growth, cautious optimism prevails regarding the trajectory of the economy, with sectors like construction playing a pivotal role in broader recovery efforts.

(Source: Reuters)

• Jamaica is being hailed as “exceptional” for achieving a sustained reduction in the public-debt-to-gross-domestic-product ratio (GDP), despite global financial crises, pandemics, and other emergencies.
• In a paper titled ‘Sustained Debt Reduction: The Jamaica Exception’, authors Serkan Arslanalp, Barry Eichengreen and Professor Peter Blair Henry, noted that the sharp, sustained reductions in public debt are outstanding “because public-debt-to-GDP ratios have been trending up in advanced countries, emerging markets, and developing countries alike”
• The paper was presented at the Brookings Institute in Washington on Thursday (March 28). It pointed out that governments have borrowed in response to financial crises, pandemics, wars and other emergencies, resulting in higher debt ratios. However, only in rare instances have they succeeded in bringing those higher debt ratios back down once the emergency passed.
• In the case of Jamaica, the Government was able to cut its debt ratio in half from 144% of GDP at the end of 2012 to 72% in 2023.
• The economists noted that the achievement was despite vulnerability to hurricanes, floods, droughts, earthquakes, storm surges and landslides, noting that Jamaica is ranked as the third most disaster-prone country in the world according to the Global Facility for Disaster Reduction and Recovery.
• The paper also highlighted the fact that the Fiscal Responsibility Framework, introduced in 2010, required the Minister of Finance to take measures to reduce, by the end of fiscal year 2016, the fiscal balance to nil, the debt-GDP ratio to 100%, and public-sector wages as a share of GDP to 9%.

(Source: JSE)

• The Ministry of Agriculture, Fisheries and Mining is collaborating with Jamaica Customs to complete the export component of the Jamaica Single Window for Trade (JWIFT) for implementation in the upcoming fiscal year.
• Minister of State, Hon. Franklin Witter, in a speech read by Chief Technical Director in the Ministry, Orville Palmer, said that the export platform is almost complete.
• “The export Single Window platform has been developed and is now at 90 per cent ready for implementation. However, before we make the system live, we will conduct a series of trials to ensure its effectiveness. The Ministry is collaborating with the Jamaica Customs Single Window entry team to have this platform up and running in 2024/25,” he said.
• He was addressing the Fresh Produce Exporters Forum on Monday (March 25) at the Medallion Hall Hotel in St. Andrew.
• JSWIFT provides a web-based portal that supports cross-border trade in Jamaica. It is designed to facilitate the Plant Quarantine Produce Inspection (PQPI) branch’s import and export business processes by providing a paperless service within a single trade mechanism, resulting in improved cost savings.
• It will also enable clients to submit applications before visiting export complexes and the production of phytosanitary and fumigation certificates, which will allow all exporters to download and print their documents from the comfort of their offices or homes.
• Witter noted that this will reduce processing time and improve communication with international trading partners by providing advanced notification of shipments.

(Source: JSE)