• The number of Americans filing new applications for unemployment benefits rose slightly last week, pointing to steadily easing labour market conditions heading into the final stretch of 2024.
• Sluggish hiring, however, means some people who lose their jobs are collecting unemployment checks for longer periods relative to early this year, potentially keeping the jobless rate above 4.0%. Economists said this should allow the Federal Reserve to cut interest rates again this month, despite stalled progress in lowering inflation to the U.S. central bank's 2.0% target.
• Initial claims for state unemployment benefits rose 9,000 to a seasonally adjusted 224,000 (forecast 215,000) for the week ended Nov. 30, the Labor Department said on Thursday. The data included the Thanksgiving holiday, which could have injected some noise into the report. Claims are entering a period of volatility, which could make it difficult to get a clear picture of the labour market.
• Claims remain at levels consistent with continued job growth and have signalled a sharp rebound in nonfarm payrolls in November after the labour market was severely distorted by Hurricane Helene and Tropical Storm Milton, as well as strikes by factory workers at Boeing and another aerospace company.
• Nonfarm payrolls likely increased by 200,000 jobs in November after rising by 12,000 in October, the lowest number since December 2020, a Reuters survey showed. Overall, the unemployment rate is forecast to rise to 4.2% from 4.1% in October.

(Source: Reuters)

• Minister of Agriculture, Fisheries and Mining, Hon. Floyd Green, says the Government will assist dairy farmers to significantly improve their output, through a $20Mn Equipment Lease Programme.
• Speaking at the Knockalva Polytechnic College in Hanover on November 28 as part of the ongoing Dairy Livestock Innovation and Nutrition Programme, the Minister said the programme is designed to alleviate the financial burden faced by farmers who struggle to acquire the necessary equipment for efficient dairy operations. He added that the farmers will now have access to modern milking technologies without the upfront costs typically associated with purchasing such equipment.
• The Minister pointed to the inefficiencies prevalent in traditional dairy farming methods, which often hinder productivity, adding that “the reality is, it is an inefficient way of doing things, and in this modern era we cannot continue to use old methodologies and expect different results”.
• He further noted that the introduction of the harvester is another key component of the initiative and that the equipment can drastically reduce the time required for harvesting grass, “transforming a task that previously took several days into a matter of minutes”.
• Mr. Green said that the Equipment Lease Programme is expected to create a ripple effect throughout the dairy industry, enhancing productivity and profitability for farmers, while also contributing to the overall growth of the agricultural sector. It should also allow farmers to be more competitive in the market.
• The initiative aligns with the Government of Jamaica’s broader strategic goals of enhancing food security and increasing agricultural productivity across Jamaica. Outside providing equipment, the government is also expected to continue offering training to equip farmers with the knowledge and skills to maximise the benefits of this new technology. These training sessions and material provisions will be essential to maintaining the sustainability of the agricultural industry.

(Source: JIS)

• LATAM Airlines has successfully resumed flights between Lima, Peru and Montego Bay, Jamaica, marking a significant milestone in Caribbean-Latin American air connectivity.
• The first flight, which arrived at full capacity at Sangster International Airport on Sunday, December 1, 2024, represents a major step in Jamaica’s strategic expansion into the Latin American market.
• Minister of Tourism, Hon. Edmund Bartlett, who was present for the flight’s arrival, alongside a delegation of government officials and tourism executives, said that this is just the beginning of Jamaica being richly rewarded for its ambitious expansion into the South American market.
• He added that the Ministry fully expects that the current three-times-per-week arrangement to Sangster will be transformed into daily flights by next winter.
• The Minister argued that the introduction of three weekly LATAM flights from Peru is a testament to the effective strategies employed by the Jamaica Tourist Board (JTB) to tap into new markets, complementing Jamaica’s traditional source markets in the United States, Canada, and Great Britain.
• LATAM Airlines Group S.A. is a Chile-based airline holding company formed by the business combination of LAN Airlines S.A. of Chile and TAM S.A. of Brazil in June 2012. LATAM is currently the largest passenger airline group in South America and is also one of the largest airline groups in the world in terms of network connections.

(Sources: JIS, Eturbo News & NCBCM Research)

• Banks which financed two Brazilian coffee traders that sought court-supervised debt restructuring last week have a total of 1.1Bn reais ($181.6Mn) in credit with the firms, court documents seen by Reuters showed on Monday.
• According to the documents, the amount refers only to advance money the banks gave to traders Atlantica and Cafebras in contracts linked to future coffee exports, known locally as ACCs. It is not known if the traders have other debts with roasters or coffee importers related to supply deals.
• Brazil's largest bank, state-controlled Banco do Brasil SA, has the biggest share of the debt with 765Mn reais, followed by Banco BTG Pactual with 181.5Mn reais and Banco do Nordeste with 100.9Mn. Three other banks had smaller credits pending from ACCs.
• Atlantica and Cafebras, both owned by Brazilian coffee group Montesanto Tavares, filed a request last week to have a large part of their debt negotiated in court, a judicial move that can precede a bankruptcy proceeding if the negotiation is not successful.
• The move left the coffee market on tenterhooks with coffee importers fearing they could not get their orders delivered or that other exporters in Brazil could run into financial troubles as coffee prices skyrocketed.
• While Banco do Brasil, BTG Pactual and Banco do Nordeste did not immediately return requests for comments, Atlantica and Cafebras said in the court documents that the recent spike in prices was the latest challenge to their operations since they caused margin calls on their hedging operations to sour.
• One coffee broker, who sent some of the court documents to Reuters, said he was surprised by the size of the credit the two traders had, particularly the part from Banco do Brasil. "It is a huge amount for companies that are not that big," he said, asking not to be named given the sensitivity of the issue.

(Source: Reuters)

• Debt-for-nature swaps are becoming a more widely used tool to help indebted countries raise money for conservation or climate-related projects. Countries like the Bahamas, and El Salvador have become the latest sovereigns added to the list of this exchange.
• Under a swap, a country buys back more expensive debt and replaces it with cheaper debt, usually with the help of a development bank. The savings are then used for environmental projects that restore mangroves, protect oceans, or help adapt to the impacts of climate change.
• Notably, Barbados completed a US$150Mn debt conversion in September 2022, freeing up US$50Mn of long-term financing for marine conservation with the government promising to protect up to 30% of seas covered by its territorial and sovereign rights. The deal was funded by a 15-year dual currency blue loan arranged by Credit Suisse and CIBC First Caribbean.
• In 2021, Belize also committed to spend US$4Mn a year and fund a US$23Mn marine conservation trust to protect the world's second-largest coral reef by buying back and retiring a US$533Mn bond. Backed by nonprofit, The Nature Conservancy, the U.S. International Development Finance Corporation and Credit Suisse, the deal provided about $200Mn in debt relief to the Central American country.
• More recently, the Bahamas unlocked more than US$120Mn in November 2024 to fund the conservation and management of its oceans and mangroves with a US$300Mn debt swap financed by Standard Chartered and backed by the private sector.
• El Salvador also freed up US$352Mn in October 2024 to fund the conservation of the Rio Lempa, the country's main river and its watershed. At the time, the deal was the largest funding commitment a country had made for conservation as part of a debt-for-nature swap. The deal was financed by a US$1Bn loan from JP Morgan with US$1Bn political risk insurance cover from DFC, the United States development finance institution, and a US$200Mn standby letter of credit from CAF, the Development Bank of Latin America and the Caribbean, likely lowering the cost of the lending.
• Overall, debt-for-nature swaps act as vital tools for promoting environmental conservation and sustainable development. By alleviating the financial burdens of indebted countries while simultaneously funding crucial conservation efforts, these mechanisms foster a good relationship between economic stability and ecological protection. Ultimately, these swaps…help to combat climate change, while supporting sovereigns and reducing government debt, highlighting the interconnectedness of financial health and environmental sustainability.

(Sources: Reuters)

• China on Tuesday banned exports to the United States of the critical minerals gallium, germanium and antimony that have widespread military applications, escalating trade tensions the day after Washington's latest crackdown on China's chip sector.
• The curbs strengthen enforcement of existing limits on critical minerals exports that Beijing began rolling out last year, but apply only to the U.S. market, in the latest escalation of trade tensions between the world's two largest economies ahead of President-elect Donald Trump taking office next month.
• A Chinese Commerce Ministry directive on dual-use items with both military and civilian applications cited national security concerns. The order, which takes immediate effect, also requires a stricter review of end-usage for graphite items shipped to the U.S.
• The move has sparked fresh concern that Beijing could next target other critical minerals, including those with even broader usage such as nickel or cobalt.
• The United States was assessing the new restrictions, but will take "necessary steps" in response, a White House spokesperson said, without giving details.
• China's announcement comes after Washington launched its third crackdown in three years on China's semiconductor industry on Monday, curbing exports to 140 companies, including chip equipment maker Naura Technology Group.
• Trump, whose first four-year White House term was marked by a bitter trade war with China, has said he will implement 10% tariffs on Chinese goods and threatened 60% tariffs on Chinese imports during his presidential campaign.

(Source: Reuters)

• The world economy is set for steady growth in the next two years if resurgent protectionism does not derail a recovery in global trade, the Organisation for Economic Cooperation and Development said on Wednesday.
• The world economy is poised to grow 3.2% this year and 3.3% in 2025 and 2026 as lower inflation, job growth and interest rate cuts help offset fiscal tightening in some countries, the OECD said in its latest Economic Outlook.
• After global trade sputtered last year, it is rebounding and growth in volumes is set to reach 3.6% next year despite a growing number of measures to restrict the flow of imports, the OECD said.
• "Rising trade tensions and further moves towards protectionism might disrupt supply chains, raise consumer prices, and negatively impact growth," the OECD said. The outlook for global trade has become clouded since U.S. President-elect Donald Trump has stepped up calls for tariff hikes on various major trade partners.
• As a cooling job market causes consumer spending to moderate, the OECD forecast that U.S. growth would ease from 2.8% this year to 2.4% in 2025 and 2.1% in 2026.
• In China, the world's second-biggest economy, growth was seen easing from 4.9% in 2024 to 4.7% in 2025 and 4.4% in 2026 despite monetary and fiscal easing as consumer spending remains sluggish due to high rainy-day savings.
• Meanwhile, in the eurozone, investment would benefit from central bank easing and tight labour markets would support consumer spending, pushing growth up from 0.8% this year to 1.3% in 2025 and 1.5% in 2026.
• UK growth was seen picking up from 0.9% this year to 1.7% in 2025 as real income gains and a hike in public spending helped offset the effect of higher taxes before growth eases back to 1.3% in 2026.
• As inflation eases, most major central banks should keep carefully loosening monetary policy with the exception of Japan, the OECD said. With most governments' public finances under strain, the OECD said they needed to take decisive action to stabilise their debt burdens.

(Source: Reuters)

• For the period January to July 2024, Jamaica’s spending on imports totalled US$4.35Bn, while the country earned approximately US$1.09Bn from exports, according to new data from the Statistical Institute of Jamaica (STATIN).
• This marks a 2% reduction in import spending compared to the same period in 2023 when Jamaica spent US$4.44Bn. The drop in the value of imports was mainly due to lower imports of Fuels and Lubricants and Raw Materials/Intermediate Goods, which fell by 4.2%, and 12.1%, respectively.
• On the export side, Jamaica's earnings fell by 9.8% from last year, moving from US$1.21Bn to US$1.09Bn, due to a sharp drop in re-exports¹ of Mineral Fuels, which fell by 67.4%. Notwithstanding, domestic exports (goods made in Jamaica) increased by 5.8%, totalling US$961.9Bn while earnings from re-exports declined to US$128.7Mn.
• Jamaica’s top five import markets during the period were the United States, China, Brazil, Japan, and Trinidad and Tobago. However, import spending from these countries fell by about 3.3% to $2.64Bn, primarily due to a 7.3% decrease in fuel (mineral) imports.
• On the other hand, Jamaica's biggest export markets included the United States, Iceland, Russia, the Netherlands, and Canada. Export revenue from these markets rose by 17.8% to US$765.1Mn, largely because of a significant increase in the value of crude materials being sold abroad, which went up by 67.2%.
• The net effect of a larger export side decline over the period translated to a deficit of roughly US$3.26Bn in the Merchandise Trade Balance segment of Jamaica’s current account (CA).
• That said, according to the Bank of Jamaica (BOJ), the CA of the balance of payments amounted to a surplus of 1.0% and 0.6% of GDP, for both the March and June 2024 quarters respectively, before recording a deficit of 0.8% of GDP for the September 2024 quarter. Still, the BOJ expects that notwithstanding the deterioration in the merchandise trade balance amid higher consumer and capital goods imports, there will be a CA surplus in FY25 and FY26. However, these surpluses of 0.5% and 1.5% respectively are expected to be lower than the 3.1% surplus for FY24.

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¹The export of imported goods, typically after they have undergone further processing or manufacture.

(Sources: STATIN & BOJ)

• Fontana Limited’s (Fontana’s) profits are down 1.5% to $60.50Mn for its first quarter ended September 30, 2024 (Q1 2025) when compared to Q1 2024. The decline occurred as the company’s revenue and operating profit growth were negated by higher finance costs and taxes.
• Revenues rose by 16.2% to J$2.01Bn, aided by month-on-month growth in transaction counts, average spending per customer, and prescription counts. All locations saw higher revenues, including its newest store in Portmore, which has largely maintained its break-even monthly sales. Other income also grew by 7.7% to $35.7Mn, reflecting the company’s efforts to tap into new revenue streams in the Portmore store.
• Amid double-digit revenue growth, cost of goods sold (COGS) grew by 9.9%  to $1.29Bn, supporting a 28.4% growth in gross profits to $774.54Mn. As such, gross profit margins improved from 33.9% to 37.5% over the period.
• Furthermore, operating expenses increased by 28.6%, ending the quarter at J$671.9Mn.This reflects the additional operating costs associated with the Portmore store, which opened in November 2023 and increased staff costs across the network spawning from initiatives to increase staff retention, engagement and benefits. Notwithstanding the surge in operating expenses, operating income grew by 26.9% to $102.61Mn.
• However, higher finance costs and tax charges tempered its overall performance. Finance costs are 25.3% more than they were in Q1 2024, owing to foreign exchange losses on lease liability and the new Portmore store. Meanwhile, taxation charges totalled J$11.9Mn compared to nil in the corresponding quarter. Fontana’s 5-year tax-free benefit for listing on the Junior Market ended in January 2024. However, it will still benefit from paying taxes at half the normal rate for another five years. 
• Amid weaker earnings, Fontana is working on improving its efficiency, which could help stimulate profit growth. The company is far advanced in its PIMS integrated point of sale system for the pharmacy department and its new integrated HR software. Management expects these new tools to improve operating efficiency for central ordering and inventory management, create faster processing times and support better data analytics.
• While it focuses on improving efficiency, management remains cognizant of risks that could threaten profitability. Of note, there are early signs of softening demand for non-essential home items, toys and home décor following Hurricane Beryl’s negative impact on the economy. The company noted that it would continue to monitor these developments and implement the required strategies to manage the potential impact.
• Fontana’s stock price has declined by 19.3% since the start of the year. The stock closed Tuesday’s trading session at $8.08, with a P/E ratio of 17.2x, below the Junior Market Distribution Sector average of 20.5x.

(Sources: JIS & NCBCM Research)

• Having successfully secured a $600Mn loan from a consortium of local commercial banks, the Barbados government is seeking to tap into the increasing confidence in its debt instruments since the 2018-2019 debt restructuring exercise. Over the weekend, the Central Bank of Barbados announced it was offering a $250Mn Government of Barbados 20-year Debenture issue.
• The issuance has a grace period of 10 years, followed by 10 years of equal quarterly payments to be made in February, May, August and November.  A total of 40 payments will be made until 2044. The interest rate on this long-term debt instrument is 7.75% and the government is offering it to the public for minimum purchases of $1000.  According to the Central Bank of Barbados, the issue will remain open until the bank advises that it has been fully subscribed.
• The Debenture¹ represents a shifting focus by the Barbados government back to raising capital on the local market. In his mid-year report to the country, Minister of State in the Ministry of Finance Ryan Straughn reported that as of September 30, 2024, Barbados’ total public debt stood at $14.87Mn, or 104.8 per cent of GDP. However, he affirmed the government’s commitment to responsible debt management, including timely debt service payments, which totalled $717.8Mn during the first half of the financial year.
• “Our focus on public sector reform, debt management, and prudent fiscal policies will ensure that Barbados remains on a sustainable fiscal path, whilst continuing to invest in the future of our people and our country,” Straughn said. He highlighted restrained government expenditure, which stood at $1.70Bn, falling short of the forecasted $1.763Bn.
• According to Straughn, the restrained expenditure was mainly due to delays in capital project execution for road repairs and housing developments. Parliament recently approved a $600Mn loan from three local commercial banks as it pursues a debt swap, where it repays higher interest loans with a new loan at a lower interest rate. The loan is being financed by CIBC, Royal Bank and ScotiaBank. CIBC is structuring the 20-year loan.  

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¹Debentures are a type of loan that is not backed by collateral, but instead by the reputation and creditworthiness of the issuer.

(Source: Barbados Today)