• China's central bank on Tuesday unveiled its biggest stimulus since the pandemic to pull the economy out of its deflationary funk and back towards the government's growth target, but analysts warned more fiscal help was vital to hit these goals.
• The broader-than-expected package, offering more funding and interest rate cuts, marks the latest attempt by policymakers to restore confidence in the world's second-largest economy after a slew of disappointing data raised concerns of a prolonged structural slowdown.
• However, analysts questioned how productive the People's Bank of China's (PBOC) liquidity injections would be, given extremely weak credit demand from businesses and consumers, and noted the absence of any policies aimed at supporting real economic activity.
• Governor Pan Gongsheng told a news conference the central bank will soon cut the amount of cash that banks must hold as reserves - known as reserve requirement ratios (RRR) - by 50 basis points (bps), freeing up about 1 trillion yuan ($142 billion) for new lending.
• Depending on the market liquidity situation later this year, the RRR may be further lowered by 0.25-0.5 percentage points, Pan said in rare forward-looking remarks. The PBOC will also cut the seven-day reverse repo rate, its new benchmark, by 0.2 percentage points to 1.5%, as well as other interest rates.

(Source: Reuters)

• U.S. private employers hired the fewest number of workers in 3-1/2-years in August and data for the prior month was revised lower, potentially hinting at a sharp labor market slowdown.
• Private payrolls increased by 99,000 jobs last month, the smallest gain since January 2021, after rising by a downwardly revised 111,000 in July, the ADP National Employment Report showed on Thursday. Economists polled by Reuters had forecast private employment would increase by 145,000 positions after a previously reported gain of 122,000.
• The ADP report, jointly developed with the Stanford Digital Economy Lab, was published ahead of Friday's more comprehensive and closely watched employment report for August from the Labor Department's Bureau of Labor Statistics. Initial prints have mostly understated private payroll growth this year.
• Private payrolls likely increased by 139,000 jobs in August after rising by 97,000 in July, according to a Reuters survey of economists. With solid gains in government employment expected, nonfarm payrolls, which refer to the number of jobs in the private sector and government agencies, are forecast to have increased by 160,000 last month after advancing by 114,000 in July.

(Source: Reuters)

• Driven by strong revenue growth from its expanded operations, Future Energy Source Company Limited (FESCO) recorded a net profit of $148.37Mn for the three months ending June 2024, a 28.2% increase relative to the first quarter of 2023.
• Revenues grew 18.6% year over year to $7.78Bn, supported primarily by higher prices and an increase in the quantity of fuel sold. As a price taker with no control over fuel supply prices, Fesco’s revenue growth was boosted by the overall year-over-year (YOY) increase in gasoline prices. (87 Octane: +J$6.08, 90 Octane: +J$9.12, ADO +J$1.06 and USLD -J$0.91).
• Cost of sales grew by 17.6% to $7.37Bn, reflecting both high ex-refinery prices for gasoline and the increase in volumes. However, with revenue growth outpacing the growth in costs, gross profit increased by 38.7% from $297.22Mn to $412.28Mn, which translated into a slight 0.77pp increase in gross profit margin. The improvement in gross profit reflects both increasing throughput (measured in litres of fuel sold) and diversification of product offerings (fuel types including LPG) and services (increased retail presence).
• Spurred largely by the addition of FESCO Kitson Town, FESCO Hayes, FESGAS Bernard Lodge, and FESGAS Naggo Head, Operating and Administrative Expenses grew 65.8% to $226.47Mn. Early-stage expenses related to new business ventures- such as business acquisition, property acquisition and development costs, and business integration costs- also contributed to the increase.
• Despite higher operating expenses, operating profit increased 16.3% to $185.81Mn when compared to the $159.79Mn in the prior period. Overall, this resulted in a marginal 5 basis points decline in operating profit margin for the quarter.
• Looking ahead, FESCO has commenced construction of its service station on Spanish Town Road, FESCO Oval, as it executes its strategy to increase its retail presence within the Kingston and St Andrew (KSA) region. Completion will take approximately fifteen (15) months, with opening anticipated in September 2025. The company plans to continue making investments in real assets and equipment to support expanding its service station businesses and network, its industrial client base, and LPG business.
• FESCO’s stock price has decreased by 13.84% since the start of the calendar year, closing Wednesday’s trading session at $3.30. It currently trades at a P/E of 19.1x, which is slightly above the Junior Market Distribution Sector Average of 18.7x.

(Sources: JSE, Company Financials & NCBCM Research)

• The Global Services Sector (GSS) continues to be a major employment driver in the local economy, with a 61.5% increase in the number of jobs created over eight years.
• Minister of Industry, Investment and Commerce, Senator the Hon. Aubyn Hill, said that 52,000 persons are now employed in the sector, moving from 32,000 in 2016, as he addressed the Global Services Association of Jamaica (GSAJ) Conference and Awards Ceremony held recently at The Jamaica Pegasus hotel in New Kingston.
• The conference, themed 'Forward Thinking…What Lies Ahead', convened stakeholders from the BPO sector, both local and international, for meaningful dialogue, the exchange of innovative ideas, and to acknowledge the exceptional contributions of individuals and organizations in the field.
• Minister Hill said that the sector has been making a major contribution to the economy and also noted that the Government had developed a national five-year strategy to position the country to further capitalise on the growth in demand for services. He also stated that global industry trends indicate substantial demand for BPO, knowledge process outsourcing (KPO), and information technology outsourcing (ITO) services, with forecast revenue growth of 9.1%, 18.4%, and 7.7%, respectively.
• President of the GSAJ, Anand Biradar, said that while the industry has performed well, more needs to be done to create a premium service experience across all sectors. “To charge a high premium, we must deliver the highest possible imaginable service experience, not just within the walls of a specific entity but across the country,” he highlighted
• The GSAJ represents the outsourcing industry and information and communications technology (ICT) companies doing business in Jamaica. Its mandate is to lobby the Government on behalf of the ICT-BPO operators to improve the operating and regulatory environment, assist member companies by representing their interests, create competitive advantages and promote the outsourcing sector in Jamaica, the region and the world.

(Source: JIS)

• Consumer prices rose 0.5% in May 2024, with the All Jamaica Consumer Price Index (CPI) rising to 134.9 from 134.2 in April.
• The main contributor to this movement was a 1.1% increase in the index for the heaviest weighted division, ‘Food and Non-Alcoholic Beverages’. The index for the class ‘Vegetables, tubers, plantains, cooking bananas and pulses’ rose 5.2% during the month on the back of higher prices for some agricultural produce, primarily vegetables, due to lower supplies resulting from dry weather conditions.
• The inflation rate was also impacted by a 0.6% increase in the index for the ‘Housing, Water, Electricity, Gas and Other Fuels’ division, which was largely influenced by higher electricity rates. However, the overall rate of inflation was tempered by a 0.1% fall in the index for the ‘Transport’ division due to lower petrol prices.
• Despite the increase in the CPI in May point-to-point inflation rate (May 2023 – May 2024) was 5.2%. This was 0.1 percentage point lower than the 5.3% recorded for April 2023 to April 2024. The divisions making the largest contribution to the point-to-point inflation rate were ‘Food and Non-Alcoholic Beverages’ (3.9%), ‘Transport’ (9.7%) and ‘Housing, Water, Electricity, Gas and Other Fuels’ (3.8%). The calendar year–to-date inflation rate as of May 2024 was -1.3%.
• At its last monetary policy meeting in May, the BOJ kept its policy rate at 7.00% as it continued to monitor the pass-through effects of previous adjustments on deposit and loan rates. The next policy decision will be on the 28th of June, when it is expected that BOJ will maintain its policy rate at 7.00%.
• While inflation has fallen over the last four months, farmers are still grappling with drought conditions. If these conditions persist, it may continue to put upward pressure on food prices, the largest component in the CPI basket.

(Sources: STATIN and NCBCM Research)

• Peru's gross domestic product expanded 5.28% in April from a year earlier, the government's INEI (Peru's National Institute of Statistics and Information; INEI, for its acronym in Spanish) statistics agency noted, the highest rate in 32 months.
• The figure reversed the contraction logged in the prior month and was well above the 1.4% growth predicted by analysts polled by Reuters, also coming above government expectations of a 4% increase.
• April's expansion was supported mainly by a year-on-year increase of nearly 24% in agriculture and livestock production and an expansion of 11.4% in the manufacturing sector, official data showed.
• The growth rate increase, the highest since September 2021, comes as Peru's government boosted its public spending by 29% between January and May, the economy ministry said in a press release explaining the GDP data.
• "Economic activity is expected to remain dynamic in May, mainly driven by fishing and primary manufacturing given the extraordinary anchovy capture in the north-central zone," the document added.

 (Source: Reuters)

• U.S. Treasury yields will plateau over the coming three months and then only fall modestly by year-end amid receding expectations of Federal Reserve interest rate cuts, according to a Reuters poll of bond strategists. After peaking at 5.02% in October, the benchmark U.S. 10-year Treasury note yield plummeted over 120 basis points (bps) as traders priced in as much as 150 bps of Fed rate cuts this year.
• Mostly strong U.S. economic data and inflation still higher than the Fed's target have pushed financial markets to limit those expectations to only two 25-bp rate reductions this year, starting September. Economists in a separate Reuters survey shared that view, saying there was a considerable risk of only one or even no rate cuts in 2024.
• That repricing in interest rate futures has caused the yield to bounce back up to 4.44%, though the path has been volatile - traversing a near-40 bps range in just the last two weeks. The U.S. 10-year note yield, seen roughly steady at 4.35% at end-August, is then forecast to decline to 4.23% and 4.13% in six and 12 months respectively, according to median forecasts from 55 fixed-income strategists and analysts in a June 6-11 Reuters poll.
• "For yields, we think it's choppier sideways and then lower towards the end of the year. We're still in the camp of inflation pressures easing and eventual Fed rate cuts - one or two - by year-end," said Kathy Jones, chief fixed income strategist for the Schwab Center for Financial Research.
• Much of the direction of yields over coming months will depend on messaging from the central bank's policy-setting meeting on Wednesday, with updated economic projections expected to show fewer rate cuts than anticipated in March.

(Source: Reuters)

• All major benchmarks the Inter-American Development Bank (IDB) established under the Public Sector Transformation Programme have been met.
• Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, disclosed while delivering the main address at the Caribbean Public Sector Financial Management Conference in Kingston on May 22. “The Public Sector Transformation Programme is the first project between the IDB and the Government of Jamaica where all of the metrics specified by the IDB at the outset of that loan have been achieved. It has not been easy, but we have gotten it done,” he said.
• The pact to support Jamaica in its public-sector transformation was established with the IDB six years prior. "They supplied both funding and technical expertise to accomplish this within a set timeframe," Dr. Clarke noted.
• The main objective of the programme was to improve the delivery of services in Jamaica by enhancing the quality of public services and enhancing efficiency in public spending. Focus was placed on information and communications technology, human resource management, rationalisation of public bodies, shared services in the public sector and compensation restructuring and overhaul. 
• The Caribbean Public Sector Financial Management Conference was hosted by the Ministry of Finance and the Public Service in partnership with the Association of Chartered Accountants (ACCA) and in collaboration with the Institute of Chartered Accountants (ICAJ).
• It was geared at increasing public awareness of financial management within the public sector to promote accountability, transparency, and good governance and was held at The Jamaica Pegasus Hotel in Kingston.

(Source:  JIS)

• United Oil & Gas Plc, the oil and gas company with a high-impact exploration asset in Jamaica and a development asset in the UK, is pleased to announce that Iman Hill, United's Non-Executive Director, has agreed to provide consultancy services to support the progress of the Jamaican project.
• Iman is a highly experienced Petroleum Engineer and has been working in the oil and gas industry for over 30 years.  She has extensive global expertise in both the technical and commercial aspects of the petroleum business, which includes field development, capital projects, commercial negotiations, farm-outs and production operations.
• Iman’s experience spans the Middle East, North and West Africa, South America, the Far East, and the North Sea. She has worked in diverse settings from onshore to ultra-deep water with companies like BP, Shell, BG Group and Dana Gas. In addition to her role as Technical Director, GM UAE and President Egypt, she also ran one of the Egyptian joint ventures as Managing Director and Board member of the Egyptian Bahraini Gas Derivatives Company.
• United Oil’s Chief Executive Officer, Brian Larkin commented: "Iman is a valued member of our board and I am pleased that she has agreed to provide additional support to the Jamaican project during this pivotal phase as we advance our work program and the farm-out process. Iman's extensive experience of farm-outs will greatly benefit the team in the months ahead, and I'm excited to collaborate with her."
• United Oil & Gas has been granted a license by the Jamaican Ministry of Science, Energy, Telecommunications, and Transport (MSETT) to explore oil off-shore Jamaica until Jan. 31, 2026. This license covers 22,400 square kilometers and could contain over 2.4Bn barrels of fuel resource.

(Sources: United Oil & Gas, NCBCM Research)

• Real GDP for the Jamaican economy increased by an estimated 1.7% during the fourth quarter of 2023 compared to the fourth quarter of 2022. This resulted from growth in both the Services and Goods Producing Industries of 2.0% and 8%, respectively.

• All the industries within the Services Industries grew, except for the Producers of Government Services, which declined by 0.4%. There were improved performances in Hotels & Restaurants (8.3%), Transport, Storage & Communication (2.1%), Wholesale & Retail Trade; Repairs; Installation of Machinery & Equipment (1.0%), Other Services (1.1%), Finance & Insurance Services (3.6%), Real Estate, Renting & Business Activities (1.3%) and Electricity & Water Supply (5.2%).
• Growth in the Goods Producing Industries was influenced by higher output levels in the following industries: Agriculture, Forestry & Fishing (2.6%), Manufacturing (0.3%) and Mining & Quarrying (21.5%). The Construction industry, however, declined by 3.8% due to reduced activities in building construction and civil engineering. Lower expenditure on the South Coast Highway Improvement Project was the main contributor to the fall in the civil engineering group.

• Preliminary estimates for 2023 indicate that the Jamaican economy expanded by 2.6% in real terms reflecting growth in both the Services and Goods Producing Industries of 3.0% and 1.6%, respectively. Notably, this estimate is 0.6% higher than the 0% projection from the IMF in October.

(Sources: STATIN)