• A measure of U.S. manufacturing activity fell to a 14-month low in January amid an outbreak of COVID-19 cases, supporting the view that economic growth lost steam at the start of the year. 
• Institute for Supply Management’s (ISM) index of national factory activity dropped to a reading of 57.6 last month, the lowest since November 2020, from 58.8 in December. A reading above 50 indicates expansion in manufacturing, which accounts for 11.9% of the U.S. economy. Economists polled by Reuters had forecast the index would drop to 57.5. 
• Makers of chemical products reported massive interruptions to their production due to supplier COVID-19 problems limiting their manufacturing of key raw materials like steel cans and chemicals. Similar sentiments were echoed by their counterparts in the fabricated metal products industry. Transportation equipment manufacturers complained that transportation, labour and inflation issues continue to hamper their supply chain and ability to service their customers and machinery manufacturers said they were constrained by transportation restrictions and a lack of supplier manpower. 
• However, makers of nonmetallic mineral products are seeing light at the end of the tunnel, reporting that the supply chain crunch may be loosening a bit.

(Source: Reuters)

• U.S. job openings rose unexpectedly in December while quits declined slightly, suggesting that labour demand held steady in the month despite a surge in COVID-19 infections and pandemic-related business disruptions. There were 1.7 jobs for every unemployed worker in December. 
• The number of available positions rose to 10.9Mn from an upwardly revised 10.8Mn in November, the Labour Department’s Job Openings and Labour Turnover Survey, or JOLTS, showed Tuesday. The figure exceeded all estimates in a Bloomberg survey of economists. 
• The quits rate was little changed at 2.9% from a record 3% in the prior month, pointing to a high degree of churn in the labour market. 
• The data show that vacancies remained elevated in December, despite temporary business closures at the end of the month due to the spreading omicron variant. While job openings could decline in January, economists expect the impact to be short-lived with employers looking to increase headcount as consumer demand strengthens in the coming months.

(Source: Bloomberg)

• Prime Minister Holness, says over the coming months the Government will be looking to remove more of the measures that have been instituted to contain the coronavirus (COVID-19) transmission. 
• “Barring any extreme change in circumstances, our approach will be to gradually scale back restrictive measures once we get out of the fourth wave that we are now experiencing. We will not keep the measures longer than is necessary,” Mr. Holness said. 
• It is highly speculated that the Omicron variant, which has been the major driver of the surge in COVID-19 cases both internationally and locally will begin to dissipate in the coming weeks, particularly in developed nations. Locally, Chief Medical Officer (CMO), Dr. Jacquiline Bisasor-McKenzie, highlighted earlier this month that Jamaica could reach the peak week of the fourth wave of the coronavirus (COVID-19) by the end of January/early February. 
• Given the Prime Minister’s statements, it is likely that we will see reduced measures leading into the summer period and beyond barring any extreme changes. This push towards a state of pre-pandemic normalcy will incentivize business activity and aid in Jamaica’s economic recovery.

(Sources: JIS and NCBCM Research)

• Caribbean Cement Company Limited (CCCL) announced the execution of the Services and Intellectual Property Agreements on January 21, 2022, with various subsidiaries of CEMEX according to the terms and conditions approved at its Annual General Meeting of Shareholders held on December 7th, 2021. 
• Under these agreements, CCCL and CEMEX have established a general framework for the corporate services provided by CEMEX to CCCL, as well as the payment of royalties for the use of intellectual property owned by CEMEX and licensed by CCCL, for a fee not exceeding 4% of CCCL’s consolidated net sales. 
• During the year 2022, the annual fee applicable to the Agreements will be equal to 2% of the consolidated net sales of CCCL, while the Company continues the process of integrating the CEMEX business models and know-how into its operations.

 (Source: JSE)

• The approval of a deal between Puerto Rico’s government and its bondholders has cleared the path for the territory to exit bankruptcy, which is expected will boost longer-term growth by freeing public funds and increasing investor confidence. 
• Puerto Rico’s reduced debt obligations will allow the government to increase spending in the coming quarters, and eventually allow it to access international capital markets. Greater fiscal flexibility will allow the territory to invest more funds into education and its relatively poor physical infrastructure, which will likely support longer-term growth. 
• The bankruptcy deal will also bolster investor sentiment. The instability of government finances has deterred fixed investment over recent years, as it created doubt about the quality of public services, social stability, and the future direction of fiscal policy, particularly tax levels. Growth is expected to average 0.7% from Fiscal Year (FY) 2022 to FY2031, on the assumption that the debt deal would be approved. 
• However, fiscal pressures may re-emerge in the years ahead, as the deal still commits the government to significant debt and pension repayments. This could force it to make unpopular spending cuts, which could spark public protests that undermine social stability. 
• Significant debt restructuring can meaningfully impact the growth and overall performance of Puerto Rico’s economy. The government’s fiscal discipline is paramount for the country’s growth potential amidst the bankruptcy concern.

 (Source: Fitch Solutions)

• Guyana is forecasted to achieve a Real Gross Domestic Product (GDP) of 47.5% this year; no other country in the world is currently projected to achieve this rate of growth in 2022. 
• The nation’s non-oil economy is expected to continue registering strong growth, currently projected at 7.7% this year, driven mainly by rebounds in rice production, gold mining, and continued expansion in construction activity and wholesale and retail trade and repairs. 
• Finance Minister, Dr. Ashni explained that real GDP is estimated to have grown by 19.9%, while non-oil GDP is estimated to have grown by 4.6% in 2021, despite the persistence of COVID19 as well as the impact of the floods. Given the current rate of overall growth, Guyana is likely to be amongst the three fastest-growing economies worldwide in 2022. 
• As a new oil and gas producer and the country with the 17th largest oil reserves in the world to date, the Finance Minister said the oil and gas sector promises to be the driver of historically high levels of growth in the Guyanese economy with strong positive spillover into the non-oil economy.

 (Source: Kaieteur News)

• The U.S. trade deficit in goods widened to a record high in December as imports increased for a fifth straight month amid strong domestic demand, suggesting that trade likely remained a drag on economic growth in the fourth quarter. 
• But imports are helping to replenish depleted inventories, with the report from the Commerce Department on Wednesday showing strong restocking at retailers and wholesalers last month. Solid inventory accumulation likely offset the impact on gross domestic product from the larger trade gap, prompting some economists to raise their growth estimates for the last quarter. 
• "Strong demand and shifting consumer preferences during the pandemic led to a surge in imports that continues to outstrip exports and is contributing to all-time highs in the deficit," said Rubeela Farooqi, chief U.S. economist at High-Frequency Economics in White Plains, New York. 
• The goods trade deficit rose 3.0% to an all-time high of $101.0 billion last month. It was also the first time that the deficit breached the $100 billion threshold. The rebuilding for inventories could keep the goods trade deficit wide at least through the first half of this year. 
• Goods imports increased 2.0% to $258.3 billion, likely as the backlog at ports continued to be cleared. The increase in imports was driven by capital goods, motor vehicles, and consumer goods. But imports of food and industrial supplies declined. Goods exports rose 1.4% to $157.3 billion. There were increases in exports of consumer goods, industrial supplies, and motor vehicles. Capital goods exports also rose, but food exports tumbled.

(Source: Reuters)

• On January 26, the Bank of Canada held its policy interest rate at 0.25%, a surprise to the market, which had anticipated a 25 basis point (bps) hike. Fitch Solutions expected the BoC would raise the policy rate in Q122, either during its January or March 2 meeting. Fitch maintained its forecast for 75 bps in hikes in 2022, bringing the policy rate to 1.00% by year-end. 
• In his remarks following the January meeting, BoC Governor Tiff Macklem took a more hawkish tone and stressed that the central bank had already shifted away from the extraordinary accommodative measures enacted during the Covid-19 pandemic. 
• The BoC concluded the asset-purchasing programme in October 2021, and the January statement omitted the forward guidance of maintaining the policy rate at the effective lower bound. The statement also highlighted that the tightening labour market and ongoing economic momentum indicated that ‘the overall slack in the economy is absorbed, thus satisfying the condition outlined in the Bank’s forward guidance on its policy interest rate’. 
• Macklem said that Canadians should expect the BoC to hike the policy interest rate in the near term to help curb inflation, which accelerated to 4.7% y-o-y, above the central bank’s 1.0-3.0% target range, in December. Fitch also forecast inflation will remain elevated, averaging 3.7% in 2022.

(Source: Fitch Solutions)

• The Pan American Health Organization (PAHO) is looking to facilitate the vaccination of at least 70% of the collective population of Latin American and Caribbean member countries against the coronavirus (COVID-19) by mid-2022. 
• The organization has been able to deliver nearly 100 million doses of vaccines to 33 countries and in recent months’ vaccine supplies have increased in the region. However, vaccination statistics show that only four member countries have, to date, vaccinated more than 75% of their populations – Chile, Cuba, Panama, and Paraguay. 
• As of Friday, January 21, 2021, the Pan American Health Organization estimates that 20.3% of Jamaica's population has been fully vaccinated, making it the second least vaccinated jurisdiction in the Caribbean behind Haiti. On Monday the United States Centers for Disease Control and Prevention escalated the travel risk of Jamaica to Level Four, warning travelers to ensure that they are fully vaccinated before travel. 
• The CDC’s latest advisory comes amidst an easing of travel and other COVID-related restrictions, and, as the country experiences its fourth wave of the pandemic. This development will likely deter short-term travel and undermine the recovery in the country’s tourism sector. 
• Furthermore, as territories push towards increasing their vaccination rate, which would help PAHO achieve its 70% target by mid-2022, Jamaica may continue to lag due to vaccine hesitancy amongst the population. Additionally, given the spread of new variants, travelers may choose destinations with higher vaccination rates, which also presents a risk to Jamaica’s tourism recovery.

(Sources: JIS News & NCBCM Research)

• Antigua and Barbuda real GDP growth is expected to increase by 3.8% in 2022, from an estimated 1.2% in 2021, as economic activity strengthen in H2 2022 as tourism demand rebounds.
• However, the government’s limited capacity to deploy countercyclical spending measures will restrain domestic demand and consumption. Omicron surges in the US, Canada, and the UK in recent months could weaken near-term tourism inflows to Antigua & Barbuda. The U.S. and U.K. remained the islands’ main source markets, combining a total of 17,306 visitors or 92% of the total visitors arriving in August 2021. The U.S. market continues to dominate as the main source market with 52.5% of the total visitor arrivals while the U.K. contributed 39.5% of the total visitor arrivals. 
• Despite near-term headwinds from Covid-19, tourism inflows are expected to strengthen throughout H2 2022 due to higher vaccination rates and increasing willingness to travel in developed markets. Furthermore, Antigua and Barbuda’s economy is forecast to reach 2019 GDP levels by 2027, with 4.5% growth in 2023, and growth averaging 3.2% between 2024-2027 on the back of improved vaccination rates. According to Our World in data as of January 26, 60% of the population in Antigua and Barbuda has been fully vaccinated and 64% of the population has at least one dose of a vaccine.  

 (Sources: Fitch Solutions & NCBCM Research)