• The dream of home ownership has gotten even further away for renters, with higher housing costs and elevated interest rates standing in the way of the American housing dream, according to a New York Federal Reserve survey released Monday.
• The share of renters as of February who possess hopes of “residential mobility,” or the belief from renters that they one day will be able to afford a home, fell to a record low 13.4% in the central bank’s annual housing survey for 2024. That’s down from 15.0% in 2023 and well off the 20.8% series high back in 2014.
• Pessimism about prospects comes amid a confluence of factors conspiring against the likelihood of renters being able to transition to home ownership. For one, some 74.2% of renters viewed obtaining a mortgage as somewhat or very difficult, which the New York Fed said has “deteriorated substantially” from the 66.5% level in 2023 and 63.1% in 2022.
• Moreover, mortgage rates have remained high by historical standards. A 30-year fixed-rate mortgage now carries an average 7.22% borrowing rate, the highest since late November 2023, according to Freddie Mac.
• Housing affordability has improved little, with the median price in February at $388,700, the highest since November, according to the National Association of Realtors. The NAR’s housing affordability index was at 103 in February, down slightly from January but still at elevated levels, with average monthly housing payments at $2,040. Survey respondents expect housing prices to increase 5.1% over the next year, nearly double the 2.6% expected rate in February 2023 and above the pre-pandemic mean of 4.2%.
• Despite prospects for the Fed to cut interest rates before the end of 2024, respondents think mortgage rates are only going to go higher. The outlook for a year from now is that borrowing costs will be 8.7% and 9.7% in three years, both survey records.

(Source: CNBC)

•  Supported by higher revenues and a reduction in the cost of sales, Caribbean Cement Company’s (CCC) net profit grew by 566.7% (or $1.64Bn) to $1.93Bn for the quarter ending March 31, 2024.
• Quarterly revenue rose by 11.9% year-over-year (yoy) to $7.62Bn, primarily driven by the continued strength in domestic demand, and the Company’s capacity to supply the local market.
• Furthermore, the cost of sales for the quarter declined by 27.1% (or $1.49Bn) to $4.01Bn, reflecting normalized operations compared to the prior period, when it incurred significantly higher costs in January and February 2023 due to planned maintenance. In light of the reduction in costs, there was a 28.18 percentage point improvement in gross margin to 47.4% (Q1 2023: 19.2%).
• Overall, operating profit increased by 728.3% (or $2.31Bn) to $2.63Bn as expenses normalized in 2024. In 2023, the company incurred higher costs due to excess inventory items, additional hired manpower, general higher maintenance costs and higher changes in inventories of finished goods and work in progress. Additionally, the company incurred costs to import cement to make up for the reduction in the production of clinker and cement, which usually occurs during planned maintenance.
• Caribbean Cement’s stock price has fallen by 1.5% since the start of the year, closing Wednesday’s trading session at $58.39. At this price, the stock trades at a P/E of 6.9x earnings, which is below the Main Market Energy, Industrials and Materials Sector Average of 9.4x earnings.
• In the near term, CCC continues to work towards expanding its operation. The company recently announced that phase one of its US$40Mn expansion project, which will deliver an increase of up to 30% in production capacity, is progressing towards full completion next year.

(Sources: Company Financials & NCBCM Research)

• Preliminary gross earnings from tourism are estimated at a record US$4.38Bn for the fiscal year 2023/24 as the sector continues its exponential growth. Stopover arrivals are projected at US$2.96Mn, reflecting a 9.4% increase over the previous period, with cruise arrivals expected to reach US$1.34Mn, up by 9% from the previous period in 2022/23.
• Minister of Tourism, Hon. Edmund Bartlett, in announcing the figures as he opened the 2024/25 Sectoral Debate in the House of Representatives on Tuesday (April 30), said that the US$4.38Bn in earnings “is the largest revenue flow from tourism in the history of the tourism industry”.
• “Several of our communities that were reeling from COVID, as a result of this performance, are now bustling centres of commerce and activity again and are providing more jobs,” he noted.
• Mr. Bartlett informed that for the first three months of 2024, Jamaica has already cleared 1.34 million visitors with earnings of US$1.27Bn. The figure includes 788,000 stopovers, which is a 7.4% increase over the first three months of 2023. “Cruise has come back [with] 554,560 [cruise passengers] representing a 16.1% increase over the corresponding three months last year,” he noted.
• Furthermore, Tourism Enhancement Fund collected US$59.2Mn or $9.2Bn in fees last year. These funds are generated through the US$20 fee for incoming airline passengers and the US$2 fee for cruise passengers, directly contributing to the Consolidated Fund.
• The country also earned total direct revenue flows into the consolidated fund of US$345.8Mn or $53.6Bn. “So, that $53.6Bn is directly into the government revenues, but it does not include the many billions that flow from general consumption tax (GCT), because tourism is the most consumption-driven activity on planet Earth. People travel to consume and consume, and at every point of consumption, they pay a tax,” Mr. Bartlett pointed out.

(Source: JIS)

• Mexico's economy posted better-than-expected first-quarter growth versus the previous three months, but lost steam on a yearly basis, preliminary estimates from national statistics agency INEGI showed on Tuesday, April 30.
• Latin America's second-largest economy posted a 0.2% gross domestic product (GDP) quarter-on-quarter expansion in the period, INEGI said, slightly above the 0.0% expected by economists polled by Reuters. The relatively tepid performance was attributed mainly to a downturn in the primary sector, which was partially offset by a rise in services.
• That said, the economy expanded by 1.6% versus a year earlier, slowing from growth of 2.5% posted in the previous quarter and below projected growth of 2.1%.
• Andres Abadia, Chief Latin America Economist at Pantheon Macroeconomics, said the figures confirmed that economic growth continued to decelerate in Q1, influenced by several challenges. "Tighter financial conditions, difficult external conditions — which offset the boost from pre-election support to households — and increased infrastructure spending, were some of the challenges," Abadia noted.
• Despite the slowdown, Mexico's economy has now expanded for the tenth consecutive quarter. However, Abadia added that the growth momentum appears sluggish compared to recent trends.

(Source: Reuters)

• 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)