• The Bank of England raised its key interest rate by a quarter of a percentage point to a 15-year peak of 5.25% on Thursday, its 14th back-to-back increase, and warned that borrowing costs were likely to stay high for some time.
• While the U.S. Federal Reserve and the European Central Bank signalled that their rate hikes were nearing an end when they both raised borrowing costs by a quarter-point last week, the BoE's Monetary Policy Committee (MPC) gave no such suggestion it was about to pause as it continues to battle high inflation.
• "The MPC will ensure that Bank Rate is sufficiently restrictive for sufficiently long to return inflation to the 2% target," the BoE said in fresh guidance.
• Governor Andrew Bailey stressed that message, even as the BoE saw the economy growing only minimally in the coming years.
• "I don't think it is time to declare it's all over," he told a press conference, adding it was "far too soon" to speculate about the timing of any rate cuts. Bailey also said "we might need to raise interest rates again but that's not certain".
• British inflation hit a 41-year high of 11.1% last October and has fallen more slowly than elsewhere, standing at 7.9% in June, the highest of any major economy.
• Deputy Governor Ben Broadbent said keeping relatively high rates over an extended period was key for cutting inflation.
• Despite the BoE's message, financial markets - which had seen a more than one in three chance of a half-point rate rise to 5.5% - focused on how the BoE had for the first time described its policy stance as "restrictive".
• Investors moved to price in slightly less BoE tightening, with rates seen peaking at 5.75% and two-year bond yields down, although investors still saw a two-in-three chance that rates would rise to 5.5% next month. Sterling was little changed on the day.

(Source: Reuters)

• Private sector companies added far more jobs than expected in July which was pushed higher by a boom in leisure and hospitality jobs.
• Job gains for the month came to 324,000, driven by a 201,000 jump in hotels, restaurants, bars and affiliated businesses. That total was well above the Dow Jones consensus estimate of 175,000, though it marked a decrease from the downwardly revised 455,000 in June.
• Services-related industries dominated job creation during the month as the economy continues its transition back from being goods-oriented in the early days of the Covid pandemic. The sector was responsible for 303,000 jobs in the month.
• Along with the big move in leisure and hospitality, information services added 36,000 positions; trade, transportation and utilities grew by 30,000; and the other services category, which encompasses things such as dry cleaning, housekeeping and the like, contributed 24,000.
• The report provides another indication that the U.S. jobs market has retained its strength despite an extended Federal Reserve campaign to slow the economy and bring down inflation.
• “The economy is doing better than expected and a healthy labour market continues to support household spending,” said Nela Richardson, ADP’s chief economist.

(Source: CNBC)

• Regency Petroleum Company Limited (RPL) recorded a net profit of $5.27Mn for the second quarter ended June 30, 2023. This represents a 65.8% yoy decrease in profitability. Similarly, profit for the six months ending June 2023 decreased by 35.6% to $25.01Mn
• Revenue for the quarter was down marginally by 0.1% yoy to $179.79Mn despite larger volumes sold. This was due to the fall-off in fuel prices over the period. However, revenues for the six months increased by 9.4% yoy to $363.27Mn and were driven by larger volumes that offset falling prices.
• Higher trucking costs driven by inflation and increased business activity were the main reasons for the 4.6% increase in direct cost over the three months ending June 2023. Similarly, higher trucking cost was the main driver for the 12.6% increase in direct cost over the six months. Consequently, this led to the fall-off in gross margin to 15.1% (from 18.9%) and 16.4% (from 18.8%) over the three months and the six months ending June 2023, respectively.
• For the quarter, operating expenses were 98.3% higher yoy at $12.24Mn as the company incurred fees related to being publicly listed such as directors' fees, higher audit and accounting fees, along with higher bank charges (given rising interest rates), advertising and promotion, as business ramps up. For the six months ended June, total operating expenses grew 114.3% from $11.33Mn to $24.29Mn.
• RPL’s stock price has increased by 57.9% since the start of the calendar year. The stock closed Wednesday’s trading session at $2.51 and currently trades at a P/E of 78.4x which is above the Junior Market Distribution Sector Average of 15.6x.
• The company recently announced its partnership with JusGas Distributors Limited which will be the primary distributor of its bulk LPG products in the corporate area of Kingston & St. Andrew. This partnership will provide the opportunity to build new relationships with businesses in the KSA region which will be a critical space for growth in the future.

(Source: JSE)

• A global tax collection framework could be in place by the end of 2024. Speaking at a forum at the DunnCox Law firm, Finance Minister Dr. Nigel Clarke said, as the agreement is being finalised, countries could begin signing on to the treaty as soon as this quarter.
• 138 countries have agreed in principle and the multilateral convention that will give legal effect to these arrangements. The treaty will be open for signing in September and countries will have through all of 2024 to sign this treaty.
• He noted that this period is required as countries must ensure that aspects of their domestic legislation, which in some cases may be thousands of pages long, are compatible with the treaty details. With globalisation opening opportunities for several firms to earn in multiple territories, this has caused some taxation concerns.
• There has however been some global consensus on how to address this, with the Pillar One solution created through the Organization for Economic Co-operation and Development (OECD).
• Clarke explained that the solution calls for about 87 global companies, who are in 'scope'. On an annual basis, there will be a mechanism to reallocate the taxing rights and the profits that they generate globally to all countries around the world. Once accepted, more than US$200 billion in tax revenues could be distributed to signatories across the world, from several multi-national firms. 
• However, there are concerns as the proposed changes could negatively affect small and developing countries, as some states which offer a lower tax rate to attract investors, may lose their appeal.

(Source: RJR News)

• In line with Fitch Solutions' expectations, the Mexican economy expanded by 0.9% on a q-o-q basis (3.6% in annualised terms) in Q223.
• Growth largely matched Q123’s impressive 1.0% rate, which helped to keep the y-o-y rate steady at 3.7% (Bloomberg consensus: 3.4%).
• No expenditure breakdown is available yet, but the high-level sectoral figures published by the Mexican statistics office showed that growth was reasonably broad-based. The tertiary sector performed particularly strongly (+1.0% q-o-q, 4.1% annualised), aided by tight labour market conditions and easing inflation.
• With this new data being in line with expectations, Fitch continues to forecast that the Mexican economy will grow by 3.0% this year and 1.6% in 2024, with risks to both of these projections, tilted to the upside.
• Fitch has recently revised sharply higher US real GDP growth projection (from 1.6% to 2.1%), reflecting the updated view that the economy is unlikely to fall into recession until Q224. For Mexico, this implies that activity in export-oriented sectors will continue to hold up reasonably well, remittances will remain solid, and strength in inward FDI flows will persist.
• Growth should still slow as the Mexican peso’s rapid appreciation is more noticeably felt over H223, while there is a risk the Banxico rate cuts that were currently pencilled in for Q423 will be pushed to 2024. That said, even with these headwinds the deceleration may not be as sharp as Fitch’s forecast implies. The company, therefore, noted that they would be updating their projections in light of incoming data before end-Q323.

(Source: Fitch Solutions)

• Barbados’ economy has grown for the ninth consecutive quarter, expanding by 3.9% in the first six months of the year.
• However, Central Bank Governor Dr Kevin Greenidge stressed that for the country’s economic fortunes to continue improving, there is a need for a major injection of investment, especially from the private sector.
• The economy is expected to grow by between 4%-5% overall this year, with a boost expected in the coming months from the return of a full Crop Over Festival itinerary and the anticipated opening of the Wyndham Sam Lord’s Hotel.
• That being said, Barbados’ growth forecast hinges on a somewhat strong performance in the tourism sector to drive broader economic activity through channels such as direct employment, and service exports, along with construction and agriculture and fisheries.
• The diversification of other revenue streams and foreign direct investments in the sovereign is therefore needed to ensure the economic rebound of Barbados.

(Source: Nation News)

• Most major brokerages do not expect a sustained drag on U.S. financial markets following Fitch's move to strip the country of its top credit rating, noting that the economy is stronger now than in 2011 when S&P Global downgraded U.S. sovereign debt.
• Stock index futures fell, with Nasdaq futures down 0.7%, while Treasury yields slid by 3 basis points. The dollar climbed 0.2%, after slipping broadly in the wake of the downgrade.
• Fitch Ratings on Tuesday cut its rating on U.S. long-term foreign-currency debt by one notch to 'AA+', citing fiscal deterioration over the next three years and repeated debt ceiling negotiations that threaten the government's ability to pay its bills.
• "Investors have lived through the S&P downgrade in 2011 and remember coming away unscathed. Another might be that people have gotten used to an elevated level of deficit spending," said Steven Zeng, strategist at Deutsche Bank. "We see the market impact from the downgrade news as ultimately limited, and Friday's jobs report could trump the downgrade news as monetary policy is still the dominant driver for yields."
• Data released last week showed the U.S. economy grew faster than expected in the second quarter as a resilient labour market supported consumer spending, with markets now pricing in a soft-landing scenario for the economy despite rapid interest rate hikes by the Federal Reserve.
• J.P.Morgan also noted that the spending cuts that ended the debt ceiling crisis of 2011 reduced federal spending by 0.7% of Gross Domestic Product (GDP) the following year, while the deal signed into law earlier this year is expected to lower federal spending by less than 0.2% of GDP next year.
• Markets took comfort when Fitch did not adjust U.S. "country ceiling", which it affirmed at AAA, showing strength in the ability of the corporate sector to convert local currency into a foreign currency for debt repayments.
• Moody's still holds a 'Aaa' rating on U.S. government debt. In a review in July, it cited economic strength, "extraordinary" funding capacity, and "central roles of the U.S. dollar and the U.S. Treasury bond market in the global financial system."

(Source: Reuters)

• British factory output contracted in July at the fastest pace in seven months, hit by higher interest rates and fewer new orders, despite weakening price pressures, a survey showed on Tuesday.
• The S&P Global/CIPS UK manufacturing Purchasing Managers' Index (PMI) fell to 45.3 in July from 46.5 in June, the lowest reading this year and the joint-weakest since May 2020, but above the 45.0 estimate in provisional PMI data.
• July's reading marked the 12th month in a row the PMI has been below 50. A reading above 50 signals growth in activity. The most recent official data showed factory output fell 1.2% in the year to the end of May.
• Rob Dobson, a director at S&P Global Market Intelligence, said the manufacturing downturn deepened in July, compounded by higher interest rates, customers with too much stock and weaker overseas demand. However, more than half of manufacturers expect output to rise over the coming 12 months.
• Demand continued to slow in July, with new domestic orders falling for the fourth month running and at the quickest rate since December. Overseas orders contracted at the steepest pace since November.
• Costs paid by manufacturers for materials and energy declined for the third consecutive month, while prices charged by factories were almost unchanged from June.
• The Bank of England, which is expected to deliver its 14th interest rate hike on Thursday, is closely monitoring indicators of price pressures as it judges how many more rate hikes are needed to control British inflation, which was 7.9% in June, the highest among major advanced economies.
• S&P Global's measure of future production improved slightly from the six-month low it hit in June, and employment contracted for the 10th month in a row.
• A final reading for the much larger services sector is due on Thursday.

(Source: Reuters)

• For June 2023, output prices for producers in the Mining and Quarrying industry increased by 1.2% while prices in the Manufacturing industry increased by 0.2% as indicated by data released by the Statistical Institute of Jamaica (STATIN).
• The increase in the index for the Mining and Quarrying industry in June was attributed to a rise in the index for the heavier-weighted major group ‘Bauxite Mining & Alumina Processing’ of 1.2%. The index for the other major group, ‘Other Mining & Quarrying’, moved up by 0.3%. A depreciation of the Jamaican dollar vis-à-vis the United States of America dollar also aided in the increase in the Index.
• The main contributors to the increase in the Manufacturing industry were the major groups, ‘Refined Petroleum Products’ (0.9%) and ‘Paper and Paper Products’, which increased by 2.0%. These increases were driven by higher petroleum commodities and higher production costs, respectively. Tempering the upward movement of the industry was a decline of 0.1% in the index for the major group ‘Food, Beverages & Tobacco’ and ‘Chemicals and Chemical Products’ down by 0.5%. The decline in the former group was due to a decline in the index for the group ‘Manufacture of Grain Mill Products, Starches and Starch Products’, a result of lower prices for wheat on the international market, while the fall in the index of ‘Chemicals and Chemical Products’ was driven by a reduction in freight and packaging costs.
• For the period June 2022 - June 2023, the index for the Mining & Quarrying industry decreased by 4.6% mainly due to a 4.9% fall in the index for the major group 'Bauxite & Alumina Processing’. For the same period, the index for the Manufacturing industry decreased by 3.3% mainly as a result of a decline of 26.8% in the index for the ‘Refined Petroleum Products’ major group. However, the decline in the index for the industry was moderated by an increase of 3.0% in the index for the heaviest-weighted major group ‘Food, Beverages & Tobacco ‘
• The Producer Price Index (PPI) is a significant economic indicator that tracks the average fluctuation in selling prices that domestic producers of goods and services experience over time. There was a minor dip in the PPI in June, however, the decision by OPEC+ to curtail oil supply could potentially escalate producer prices. This is due to the fact that a reduction in oil supply could drive up costs related to transportation and electricity. However, the supply cut has failed to significantly influence oil prices thus far.
• The recent development of Russia backing out of the grain deal could indeed have implications for food prices, and subsequently, the PPI. If the withdrawal from the deal leads to a shortage in grain supply, it could drive up the cost of grain-based products. This could result in an increase in the index for the major group 'Food, Beverages & Tobacco', thereby influencing the overall PPI. However, the extent of this impact would depend on the severity of the grain shortage and the responsiveness of the market to these changes.

(Source: STATIN)

• The Dominican Republic's Ministry of Economy, Planning, and Development has released the “Macroeconomic Situation Report: Situation Monitoring” for June 2023. The report reveals that the Monthly Indicator of Economic Activity (IMAE) experienced a year-on-year growth of 2.4% in May, surpassing the growth rates recorded in the first four months of the year. The IMAE's cumulative growth for the initial five months of 2023 stood at 1.4%.
• This positive economic performance is attributed to the successful implementation of coordinated expansionary monetary and fiscal measures, bolstering the country’s robust macroeconomic fundamentals.
• As for growth projections, the real GDP is expected to grow by 4.0% in 2023, and economic agents forecast a growth rate of approximately 5.0% for 2024, indicating a promising outlook for the Dominican economy.
• In terms of inflation, the report states that it was within the target range (around 4.0% - the mid-point of the target range) established in the monetary program for June, with a year-on-year variation of 4.00%. This rate is the lowest recorded since July 2020. Core inflation, which excludes volatile items, registered an interannual variation of 5.33%.
• Since May, the Central Bank has embarked on a monetary easing process. Analysts predict a continued reduction in the policy rate on a gradual basis, with a cumulative cut of 75bps expected by the end of the year. Further reductions in 2024 will depend on the overall inflation dynamics, particularly the impact of the recent surge in food commodity prices on domestic inflation.
• The report also highlights the groups that contributed to attenuating the variation in the price index for June, particularly in the Housing and Transportation categories, which experienced negative variations and incidences in the overall inflation rate.

(Source: Dominican Today)