• The Conference Board's consumer confidence index increased to a reading of 115.8 this month from an upwardly revised 111.9 in November. Economists polled by Reuters had forecast the index rising to 110.8 from the previously reported reading of 109.5 
• U.S. consumer confidence improved further in December, suggesting the economy would continue to expand in 2022 despite a resurgence in COVID-19 infections and reduced fiscal stimulus. 
• The survey from the Conference Board on Wednesday showed more consumers planned to buy a house and big-ticket items such as motor vehicles and major household appliances as well as go on vacation over the next six months. Inflation concerns eased a bit and households remained upbeat about the labour market.

(Source: Reuters)

• Lumber Depot Ltd. reported a 62.3% increase in net profit to $107.20Mn (EPS: $0.15) for the six months ended October 31, 2021 aided by a significant expansion in “Other Income”, modest topline growth (8.6%) and a reduction in admin and other expenses (3.1%). Continued growth seen in the construction sector supported revenue growth of 8.6%. Of note, other income jumped from $0.73Mn to $9.21Mn. 
• Despite the strong performance, the company was not immune to the ongoing supply chain challenges as this resulted in an increase in the cost for construction inputs. Consequently cost of goods sold increased by 4.0%. Increases in finance cost (+10.2%) and finance income (-57.6%) also weighed on earnings. 
• That being said, revenues and profits for the three-month period ended October 31, 2021, were directly affected by the lock-down period effected during the late summer as it resulted in 17 lost sales days during the quarter. It also caused unprecedented disruptions to the construction planning and work cycle. Despite this, the earnings result was resilient. 
• Management believes that curfews, travel restrictions and new workplace rules have presented additional risks to its supply chain, strained consumer and business confidence, and have resulted in increased volatility in commodity prices, exchange rates and some borrowing costs in the short term. However, management is confident that its team has the capacity to navigate these challenges. 
• Lumber Depot’s stock price has appreciated by 108.4% since the start of the year and closed Tuesday’s trading session at $3.21 per share. At this price the stock currently trades at a P/E of 11.5x, which is below the junior market distribution sector average of 16.0x.

(Sources: Lumber Depot Financials, NCBCM Research)

• KPREIT, on December 17, 2021, completed the acquisition of an approximately 2.7-acre property on Spanish Town Road with approximately 23,000 sqft of warehouse and office space to be leased. The property was acquired for a consideration of J$215.0Mn. 
• This marks KPREIT’s second property acquisition on Spanish Town Road, a main thoroughfare for the industry and commerce in Jamaica. It also marks the Group’s fourth acquisition for 2021. The thrust remains to acquire more properties in the industrial and warehousing space, against the background of growth in the e-commerce and logistics businesses over the last few years. 
• Additionally, on December 17, the Group disposed of the last unit held in the Loft II Condominiums in Miami, Florida. During the fourth quarter of 2021, a total of three (3) condo units at the Loft II were sold for a total consideration of US$888,000. The Miami Realtors Association reported that median sales prices for condos and townhouses in Miami-Dade and Broward counties increased by 22.0% and 21.0%, respectively, year on year (YoY) as at October 2021. 
• For the nine months ended September 30, 2021, KPREIT reported a 50% YoY increase in rental revenue to US$2.2Mn, while net profit amounted to approximately US$1.4Mn in 2021 versus a profit of US$70,154 in the prior year. A continuation in this trend of acquiring new property, particularly as the company seems to be strategically repositioning its real estate portfolio from residential to industrial real estate, will support this increasing trend in revenue and earnings, especially in the face of rising demand for industrial real estate.

(Sources: JSE News & NCBCM Research)

• The president of the Dominican Republic’s Commonwealth Countries Roundtable, Fernando González Nicolás, said that in 2021 local trade with the 54 countries that make up the Commonwealth increased to US$2.108 billion. 
• González Nicolás added that the exchange increased by 11% compared to the 1,904 million dollars achieved in 2020. He stressed that bilateral trade relations with these nations were balanced and healthy for both parties because the volumes of exports were very similar to imports. In 2021, Dom Rep exported to the Commonwealth countries $1,044Mn, while it imported from a total of 1,063 million dollars from these Common Wealth countries. 
• The main destinations for exports of Dominican products to these nations were, in the first place, India with a total of $665Mn this year; followed by Great Britain, with $80Mn; Jamaica, $77Mn; Canada, with $49 Mn; and in fifth place, Trinidad and Tobago, with $34Mn.  
• González Nicolás projects that, for 2022, exports to Commonwealth countries and investments from these countries to the Dominican Republic will continue to increase.

(Source: Dominican Today)

• According to the Caribbean Community’s (CARICOM) Business News Aggregation service, the European Union (EU) has approved the allocation of €7.56 million (equivalent to G$1.8 Bn) to Guyana, as part of its Budget Support Programme. 
• Last Tuesday, a joint press conference was conducted where President Irfaan Ali clarified that the grant fund represents the “final tranche of payments under a multi-year programme” valued at €30 million. CARICOM clarified that the funding support came into being after Guyana lost Europe as one of its preferential markets for sugar. 
• During the press conference, the EU Ambassador, Fernando Ponz Cantó pointed out that the grant funds are fostered through the EU’s national treasury, and this contribution is a validation of the EU’s confidence and trust in the PPP/C government. 
• Previously, the funds from EU’s Budget Support Programme for Guyana were allocated toward housing, climate adaptation, improved infrastructure, and repairing the country’s sea defences. This was evident in a similar Budget Support Programme last year, where the EU disbursed G$ 19.8 billion for Guyana.

(Source: Kaieteur News)

• The tourism sector, one of the industries that suffered most during the pandemic, will be an increasing driver of economic recovery in 2022. 
• However, Fitch believes that the recovery will be uneven, particularly for economies that depend heavily on tourism. It is expected that most Western consumers’ willingness to travel will rise in 2022 as household balance sheets remain strong and as restrictions continue to ease. 
• But Fitch also expects that demand will be focused on short-haul destinations. This will benefit markets in the Caribbean and Southern Europe.

(Source: Fitch Solutions)

• Britain announced on Tuesday 1 billion pounds ($1.3 billion) of extra support for businesses hit hardest by the wave of Omicron variant coronavirus cases, which is hammering the country's hospitality sector and other businesses. 
• Finance minister Rishi Sunak said he was confident the measures would help hundreds of thousands of businesses. But he added that he would "respond proportionately and appropriately" if the government were to impose further restrictions to slow Omicron. 
• For now, hospitality businesses in England are not subject to any new legal restrictions despite a 60% surge in COVID-19 cases over the past week, which has taken the number of infections to around 90,000 a day. 
• Prime Minister Boris Johnson said there was not enough evidence to justify new COVID-19 restrictions in England before Christmas, but the situation remained extremely difficult and the government might need to act afterwards.

(Source: Reuters)

• The Bank of Jamaica (BOJ) increased its policy interest rate (the rate offered to deposit-taking institutions on overnight placements with BOJ) by 50 basis points to 2.50% per annum, effective 21 December 2021. 
• The decision to further reduce the level of monetary policy accommodation was made by a unanimous vote by the Bank’s Monetary Policy Committee (MPC). The move was based on the committee’s assessment that inflation for November 2021 of 7.8%, although lower than the 8.5% recorded in October, breached the upper limit of the Bank’s target range and was likely to continue to successively breach the target range over the next 8 to 10 months. 
• The risks to the inflation forecast are assessed to be skewed to the upside. Upside risks (which means that inflation could track above the forecast) include further increases in inflation expectations, stronger pass-through of international commodity and shipping prices to domestic prices, higher inflation among Jamaica’s main trading partners and the impact of adverse weather on agricultural food prices. Downside risks include lower energy-related prices and lower domestic demand. 
• The October 2021 inflation expectations survey published by the BOJ indicated that the point-to-point inflation for December 2021 is expected to be about 7.8%. This represents an upward trend in the results from 7.1% and 6.7% for September and July, respectively. In line with this, market participants had rightfully anticipated another rate hike from the BOJ. Of note, over the last 8 months, inflation expectations have been consistently above or at the upper end of the BOJ’s target range. However, since September, it has been trending higher. 
• Central Banks in developed nations are beginning to tighten monetary policy, with the Bank of England raising interest rates to 0.25% from 0.1% in response to calls to tackle surging price rises. In the US, a senior Federal Reserve official has noted that it could raise rates as early as March 2022 in the face of alarmingly high prices. As prices continue to surge we could see more central banks around the world, raising interest rates and could market the end  of one of the longest periods of low interest rates.

 (Sources: BOJ & NCBCM Research)

• Minister of Tourism, Hon. Edmund Bartlett, says the 7,000 airline passengers, who arrived at the Sangster International Airport (SIA) in St. James on December 11, is a prelude of what is to come for the winter season. 
• This was a single day record since the reopening of air travel on June 15, 2020, and Minister Bartlett noted that tourism is rebounding and showing signs of its former strength. Such a large number of air passengers into Jamaica’s largest airport in just one day is a clear indication that demand for Jamaica’s tourism product remains strong. 
• A total of 52 flights from commercial, charter and private aircraft landed at SIA on December 11. Minister Bartlett said that to meet the higher demand for Jamaica, American Airlines recently upgraded the aircraft utilised on flights to Montego Bay from its major city hubs of Dallas/Fort Worth, Miami, and Philadelphia. 
• Based on feedback from several of Jamaica’s key international tourism partners, the country is progressing well on its path to recovery and expects to welcome approximately 1.5Mn visitors this year. This is largely due to the success of the comprehensive JAMAICA CARES programme, which ensures that travelers feel safe and confident in choosing our island for their visits. 
• There has also been an increase in cruise arrivals and that 90% of all planned tourist investments remain on track. Furthermore, the minister said that barring the unforeseen, the sector is set to recover faster than anyone would have predicted 12 months ago. Notwithstanding, the Omicron COVID-19 variant, which is spreading in Jamaica’s key source markets, remains a threat to the anticipated performance of the sector.

(Source: JIS News & NCBCM Research)

• For this week, Fitch Solutions will be watching the development of the Omicron variant of COVID-19 in both Latin America and the rest of the world for potential impacts on the agency’s growth outlook for the region. Latin America has come a long way towards getting the pandemic under control since mid-2021, as new cases have fallen sharply and the regional vaccination rate has pushed towards 80%. 
• However, the first cases of Omicron in the region were reported in late November in Brazil, and it has been identified in seven countries including Mexico, Argentina and Chile as of December 17. Given the variant’s apparent higher transmissibility, there is a significant risk that it causes renewed spikes in cases in the coming weeks. 
• The spread of the variant poses downside risks to Fitch’s forecast for Latin America to see 2.3% real GDP growth in 2022. New outbreaks could cause leaders across the region to re-impose restrictions on mobility. While restrictions on a city or state level would be a blow to private consumption, investment and economic confidence, Fitch does not believe there is sufficient political will to bring back national lockdowns of the intensity seen in Q220. 
• The risk of lockdowns or reduced demand, due to concerns about the virus in many of Latin America’s trading partners, could weigh on commodity prices, demand for exports or remittances, dragging down growth across the region.

(Source: Fitch Solutions)