• The number of Americans filing new claims for unemployment benefits fell more than expected last week, with applications in Massachusetts decreasing sharply, suggesting the labour market remains tight.
• The steep decline in weekly jobless claims reported by the Labor Department on Thursday reversed the surge in the prior week, which had boosted them to the highest level since Oct. 30, 2021. That increase was largely blamed on an unusual jump in applications for unemployment insurance in Massachusetts.
• The state's Department of Unemployment Assistance said last week it was "experiencing an increase in fraudulent claim activities in which people attempted to gain access to active UI accounts or file new UI claims using stolen personal information so they can fraudulently obtain unemployment benefits."
• "The labour market is not deteriorating like we had thought as jobless claims were pumped up to recession levels by fraudulent applications for unemployment benefits," said Christopher Rupkey, chief economist at FWDBONDS in New York.
• Initial claims for state unemployment benefits declined 22,000 to a seasonally adjusted 242,000 for the week ended May 13. The drop was the largest since Nov. 20, 2021. Economists polled by Reuters had forecast 254,000 for the latest week.
• The labour market is being closely watched for signs of stress from the Federal Reserve's fastest monetary policy tightening campaign since the 1980s. The U.S. central bank is expected to keep interest rates unchanged next month for the first time since it started hiking them in March 2022.

(Source: Reuters)

• President Joe Biden sounds optimistic about the odds of reaching a deal with Republicans to raise or suspend the debt limit in time to avoid economic fallout from even a potential U.S. debt default. “I really think there’s a desire on their part, as well as ours, to reach an agreement, and I think we’ll be able to do it,” Biden told reporters Sunday in Delaware. As to his state of mind, he said, “I remain optimistic because I’m a congenital optimist.”
• Biden also characterized the talks underway between White House liaisons and congressional aides as “a negotiation,” a notable choice of words after months of insisting he would not “negotiate” over the debt limit. The president and the top four congressional leaders plan to meet again about the debt ceiling Tuesday.
• Biden’s remarks followed the postponement of a White House meeting, originally set for Friday. The White House said the three-day delay should be viewed as a sign of progress in the talks. “The meetings have been productive over the past few days and leaders wanted to continue before they regrouped,” White House press secretary Karine Jean-Pierre said Friday.
• Not everyone involved in the talks has such a sunny outlook, however, as House Speaker Kevin McCarthy told NBC News on Monday that he thinks they are still far apart and that it doesn’t seem yet that they want a deal. “It seems like they want to look like they’re in a meeting,” said McCarthy. “They’re not talking about anything serious.”
• Democrats have spent months blasting House Republicans’ proposal, which demands sweeping cuts to federal spending in exchange for agreeing to pass a debt limit hike. Just last Thursday, Biden accused the House GOP of “holding our economy hostage.” Against this backdrop of months of bitter partisan attacks, Biden’s sudden shift in tone Sunday was striking.
• Investors are watching how the negotiations unfold. Stocks declined Monday morning as the market chewed over the comments from Biden and McCarthy.

(Source: CNBC)

• The almost $200-million expansion of Best Dressed Chicken’s Cumberland Hatchery in Portmore is being hailed by Minister of Agriculture and Fisheries, Hon. Pearnel Charles Jr., as a major boost for the agriculture sector. The expansion increases the hatchery’s capacity by 70 per cent, allowing the company to better meet the demands of the local market and, particularly, small poultry farmers, by ensuring a steady supply of baby chicks.
• Speaking at the reopening ceremony on Wednesday (May 10), Minister Charles Jr., said the Jamaica Broilers Group, which is the parent organization of Best Dressed Chicken, continues to be a “primary strategic partner” with a “long and rich history” of assisting small farmers across Jamaica. For his part, Group President and Chief Executive Officer of the Jamaica Broilers Group, Christopher Levy, said that the upgrade is an investment in the small farmers of the country, who represent 30 per cent of the production of poultry meat in Jamaica.
• Mr. Levy said that the small poultry farmers are the country’s first line of defence against imported poultry, and the recent investment in the Cumberland Hatchery is to bring the company “up to amazing standards”. Furthermore, he outlined that the move is hoped to instill greater confidence in the poultry sector and spur other investments.
• The increased capacity provided by the Cumberland hatchery will help shore up the local supply of baby chicks going to small farmers - a critical part of the sector, especially as Jamaica is looking to reduce poultry imports. This will also be good for JBG in terms of sales thereby boosting bottom-line growth.

(Source: JIS News)

• At a destination press briefing held at the 41st Caribbean Hotel & Tourism Association (CHTA) Caribbean Travel Marketplace in Barbados, Minister of Tourism the Hon. Edmund Bartlett announced that Jamaica has surpassed one million visitor arrivals year-to-date for 2023, reaching this milestone approximately one month earlier than in 2022.
• He noted that from January through December 2022 Jamaica welcomed 2,478,386 stopover arrivals, a 69.2% increase over 2021 and nearly a full recovery to 2019 highs. The projections ahead for 2023 through 2025, are that the country will attract more than 3.8 million visitors in 2023 and grow to more than 5 million visitors in 2025.
• In order to keep this growth on an upward trajectory, the country continues to build out new air service with new flights this year from Chicago Midway, Denver, St. Louis, Dallas, Kansas City, and London Gatwick.  It is also expanding and modernizing Sangster International Airport and has approximately 8,000 new hotel rooms slated for construction over the next two to five years. 
• The resurgence of the tourism industry has been the main driver of economic growth. The benefits are expected to continue as investments are being made and partnerships are being formed to boost the growth of the industry and by extension Jamaica.

(Source: JIS)

• After the Banco Central de Chile (BCC) decided to hold its policy rate at 11.25% at its May 12 meeting, Fitch continues to expect the rate will remain on hold through H123 as inflation – though slowing – remains far above the bank’s target.
• This was the fourth-consecutive hold and came in a unanimous vote. The accompanying statement underlined that the Chilean economy has continued to cool (though the bank removed the statement that the economy was adjusting slower than expected), while headline and core inflation and medium-term inflation expectations all remain above the bank’s 3.0% target.
• Additionally, the bank reiterated that it “considers it appropriate to maintain the policy rate at 11.25% until the state of the macroeconomy indicates that inflation is converging to the 3% target.” The bank did not offer clear forward guidance, but the tone of the announcement did not suggest an imminent change in stance, according to Fitch.
• It is anticipated that the bank will begin cutting rates in H223 as disinflation continues and the US Fed goes on hold, though Fitch has revised its end-2023 forecast up from 7.75% to 8.25% as economic activity appears somewhat stronger than anticipated.
• Risks to Fitch’s forecast are slightly to the upside, as a stronger economic performance could lead to a slower deceleration in price growth and fewer rate cuts than expected given concerns that fast rate cuts could reignite inflationary pressures.

(Source: Fitch Solutions)

• Brazil, the world's top chicken exporter, has for the first time confirmed Highly Pathogenic Avian Influenza (HPAI) cases but only in wild birds, the Agriculture Ministry said on Monday, May 15.
• Two cases were detected in wild birds and should not trigger a ban on imports of Brazilian poultry products as per guidelines from the World Organization for Animal Health (WOAH), according to the Brazilian government.
• The avian influenza virus can kill entire flocks of birds and cause losses for the farming sector. Brazil's chicken exports rose by 27% last year to $9.76 billion as other countries reeled from a global outbreak of the virus, yet the South American country had never registered a case until now.
• Epidemiological surveillance services will be intensified to detect potential cases in wild and commercial animals in the area close to where the cases were confirmed, a government source said.
• The agriculture ministry said that because the cases were detected in wild animals, Brazil's status "as a country free of HPAI" was not affected.
• Notably, Brazil's neighbour Argentina suspended its poultry exports in late February after recording the first case of bird flu in its poultry industry in the southern Rio Negro province but resumed exports from bird flu-free areas in late March.
• As these developments continue to unravel, the possibility exists that other forms of protein such as Mutton or Beef, will experience increased demand as consumers shift from poultry and seek other alternatives. This bodes well for producers of alternative forms of protein such as Marfrig.

(Source: Reuters)

• U.S. retail sales increased less than expected in April, rising by 0.4% with some Economists forecasting sales rebounding by 0.8%. The underlying trend was solid, suggesting that consumer spending got off to a strong start in the second quarter, defying expectations of a recession this year.
• The smaller-than-expected rebound in retail sales last month reported by the Commerce Department on Tuesday likely reflected a moderate rise in receipts at auto dealerships, which some economists have said was because of lower prices. Receipts at auto dealers rose 0.4% after back-to-back decreases. "That adds to the signs that vehicle prices are now falling, weighing on the nominal value of sales," said Andrew Hunter, deputy chief Economist at Capital Economics.
• Nevertheless, higher borrowing costs and prices are taking a toll on consumers with sales at building material and garden equipment supplies dealers marginally increasing by 0.5% and online retail sales surging by 1.2%, likely due to price-conscious consumers continuing to seek discounts and deals.
• The rise in retail sales added to strong job growth in April suggesting that the economy was experiencing a spring revival after activity slowed in February and March. Spending is being underpinned by strong wage gains due to a tight labour market.
• "Outright declines in spending will be needed in the remaining two months of the second quarter to spur a contraction in real personal consumption," said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. "This risks another delay in the long-awaited recession, likely due to ongoing revenge spending, excess savings, and sturdy income growth."

(Source: Reuters)

• China's April industrial output and retail sales growth undershot forecasts, suggesting the economy lost momentum at the beginning of the second quarter intensifying pressure on policymakers to shore up a wobbly post-COVID recovery.
• Tuesday's batch of data, also showed a further decline in property investment which adds to concerns about the outlook for the world's second-biggest economy as both its domestic and export engines of growth remain underpowered.
• "Today's weaker-than-expected data show how difficult it is to keep the growth engine running after restarting it," said Bruce Pang, chief economist at Jones Lang Lasalle. Nomura economists took an even dimmer view: "As disappointment kicks in, we see a rising risk of a downward spiral, resulting in weaker activity data, rising unemployment, persistent disinflation, falling market interest rates and a weaker currency." "Year-over-year growth in Q2 may still look elevated, thanks to a low base, but sequential growth could experience a material decline," they said.
• Other data over the past week showing shrinking imports in April, deepening factory-gate deflation and worse-than-expected bank loans signalled weak domestic demand, raising pressures on policymakers to shore up the economic recovery as global growth falters. China's central bank kept the interest rate unchanged on Monday as expected, but markets are betting on more monetary easing in the coming months as the commodities data also highlighted pockets of weakness across the economy.

(Source: Reuters)

• For April 2023, the All-Jamaica Consumer Price Index (CPI) decreased by 0.4% when compared to the previous month. Most notably, this pushed the point-to-point inflation rate lower for April, and at 5.8% it is now within the BOJ’s target range of 4.0 to 6.0% for the first time since July 2021.
• For April, the decline in monthly inflation was largely driven by the 4.2% decrease in the index of the ‘Housing, Water, Electricity, Gas and Other Fuels’ division. It was lower due to declining electricity rates. There was also a decline in the index for the ‘Transport’ division which moved down by 0.1%, primarily because of reduced costs of petrol and air travel.
• The inflation rate was, however, tempered by a 0.6% increase in the index for the heaviest weighted division ‘Food and Non-Alcoholic Beverages’. This was due to higher prices for some agricultural produce such as sweet potato, yam, lettuce and tomato.
• The point-to-point inflation rate as of April 2023 was 5.8%. This was influenced mainly by the point-to-point inflation rate for the divisions: ‘Food and Non-Alcoholic Beverages’ (10.3%) and Restaurants and Accommodations Services’ (16.8%). These upward movements were, however, tempered by a 3.1% decline in the index for the group ‘Housing, Water, Electricity, Gas and Other Fuels.’
• On May 19, 2023, the BOJ will host its monetary policy meeting and we anticipate that the bank will continue holding the policy interest rateat 7.0% as inflation continues to abate due to the continued pass-through effects of previous rate hikes and food and energy prices continue to come down.

(Source: STATIN)

• TransJamaica Highway Limited recorded a net profit of US$4.98Mn for the first quarter that ended March 31, 2023. This represents a 639.0% increase in profitability year-over-year.
• Revenue for the quarter was up by 20.9% yoy to U$17.99Mn. This was attributable to the continued improvement in traffic following the lifting of the measures implemented to combat the spread of COVID-19, in addition to the annual increase in Toll Tariff which took effect in July 2022.
• The company incurred operating expenses of US$5.49Mn, reflecting a 43.8% decrease, compared to US$9.75Mn reported for the same period in 2022. This decrease was primarily due to cost savings realized following the acquisition of the toll operator, Jamaica Infrastructure Operator (JIO), and the subsequent reduction in the fixed operation fee. This was however partially offset by higher consultancy fees as the company has undertaken an exercise to restructure its operations, higher marketing costs associated with promoting the usage of ‘my t-Tag’ App, encouraging greater usage of the Tags, as well as higher insurance cost and security maintenance costs.
• TJH’s stock price has increased by 45.7% since the start of the calendar year. The stock closed Tuesday’s trading session at $2.04 and currently trades at a P/E of 19.9x which is above the Main Market Energy, Industrial, and Materials Sector Average of 15.0x.
• TransJamaica will continue to realise cost savings throughout the year as the change in the operating fee structure is expected to significantly reduce operating expenses by more than 50% (approximately US$12 million per annum). Net profit will therefore continue to outperform 2022 for the remainder of the year.

(Sources: JSE and NCBCM Research)