• Wall Street's main indexes marched on, with the S&P 500 and Nasdaq hitting record highs on Wednesday, as fresh technology stock buying combined with hopes the Federal Reserve would keep the stimulus taps open after weaker-than-expected private payrolls data.
• Technology stocks, which tend to benefit from a low-rate environment, were up 0.5%. Apple Inc rose 1.2% to its second record high this week, and Microsoft Corp, Amazon.com Inc and Google-owner Alphabet Inc all advanced between 0.4% and 1.4%.
• Wall Street's main indexes have hit record highs recently, with the benchmark S&P 500 notching a solid 20.8% gain so far this year as investors shrugged off risks around a rise in new coronavirus infections and hoped for the Fed to remain dovish in its policy stance.

(Source: Reuters)

• The Jamaican economy grew by 12.9% for the April to June 2021 quarter, influenced by increased production in the goods producing and services industry of 7.8% and 14.0% respectively, according to the Planning Institute of Jamaica.
• The growth in the goods producing industry was mainly driven by an increase in the real value added by the agriculture, forestry & fishing (10.3%), manufacturing (3.1%) and the construction (18.3%) sectors.
• Improved weather conditions and increased demand accompanied by the relaxation of measures to contain the COVID-19 pandemic, particularly from related industries such as Hotels Restaurants, were the main factors driving the performance of the manufacturing and agricultural sectors. The expansion in the construction sector was influenced by increased capital expenditure on civil engineering activities and a rise in residential and non-residential building.
• All sectors in the services industry grew, with the highest growth seen in the hotels and restaurants sector at 330.7%. The sector rallied from depressed levels in Q2 2020 on the back of an increase in tourism activity due to relaxed travelling restrictions and vaccine-led recovery in key markets.
• The prospects for overall economic recovery in the short term are positive, with the PIOJ projecting growth between 4%-6% in Q3 2021. This should be led by the gradual recovery of the global economy, which augurs well for external demand; as well as continued recovery in the levels of domestic employment; and a strengthening in business confidence, which are both expected to support domestic demand.
• However, the spread of the Delta variant, re-imposition of stricter containment measures, adverse weather conditions during the hurricane season, plant down-time due to relatively aged plant equipment in major industries, as well as the recent fire at the Jamalco Alumina refinery, are significant downside risks to this forecast. Importantly, the imposition of no movement days to stem the spread of the virus is likely to severely impact key sectors, such as retail and distribution, weighing on business confidence and corporate profits.

(Source: PIOJ and NCBCM Research)

• Fitch Solutions believes there is an increasing probability that the ruling, centre-right Free National Movement (FNM) could fail to win re-election during the snap September 16 parliamentary election in the Bahamas, amid a slow vaccination campaign and rising cases in the country. The Bahamas are in the midst of a second wave of COVID-19 cases, with the 7-day moving average of new cases reaching an all-time high on August 1, and cases remained high throughout the month
• Weak economic activity and Bahamian voters’ tendency to vote for the out of power further undermine the FNM’s prospects. As a result, Fitch has revised down the Bahamas’ score in its Short-Term Political Risk Index (SPTRI) to 67.1 out of 100, from 72.1 due to increased risks to policy continuity.
• That being said, it has not made a final forecast for the election due to a lack of public polling and the large swings that typify Bahamian elections.

(Source: Fitch Solutions)

• Peru’s banking sector will post moderate growth in the short-to-medium term as negative base effects and policy uncertainty offset macroeconomic tailwinds.
• However, Fitch Solutions expects that sustained real GDP growth and the banking sector's relatively small size will help Peruvian banks, such as Scotiabank Peru expand at a faster pace than regional peers in the longer term.
• Fitch forecasts asset, loan and deposit growth of 5.4%, 6.1% and 6.9% in 2021 and 7.9%, 8.0% and 8.7% in 2022, down from 24.4%, 11.3% and 25.4% growth in 2020.

(Source: Fitch Solutions)

• U.S. consumer confidence fell to a six-month low in August as worries about soaring COVID-19 infections and higher inflation dimmed the outlook for the economy.
• The Conference Board's consumer confidence index dropped to a reading of 113.8 this month, the lowest since February, from 125.1 in July.
• The survey showed that consumers are less inclined to buy a home and big-ticket items like motor vehicles and major household appliances over the next six months, supporting the view that consumer spending will cool in the third quarter after two straight quarters of robust growth.
• “While the resurgence of COVID-19 and inflation concerns have dampened confidence, it is too soon to conclude this decline will result in consumers significantly curtailing their spending in the months ahead," said Lynn Franco, senior director of economic indicators at the Conference Board in Washington.

(Source: Marketwatch)

• Euro zone inflation surged to a 10-year-high in August, with further rises likely, challenging the European Central Bank's benign view on price growth and its commitment to look past what it deems a temporary increase.
• Consumer inflation in the 19 countries sharing the single currency accelerated to 3% this month from 2.2% in July, far above expectations for 2.7% and moving well clear of the ECB's 2% target.
• The increase was fuelled by energy costs, but food prices also surged, while there were unusually large increases in the prices of industrial goods too, according to Eurostat, the EU's statistics agency.
• Markets mostly shrugged off the data, with stocks rising and yields increasing just a basis point or two, suggesting the narrative of temporary inflation and ultra-easy central bank policy for years to come remains the central one.

(Source: Reuters)

• Data from the April 2021 labour market survey indicates that more than half of the 151,100 persons who lost their jobs in July 2020, during the initial stages of the COVID-19 pandemic, have been reinstated according to Planning Institute of Jamaica (PIOJ) Director General, Dr. Wayne Henry.
• The unemployment rate for April 2021 was 9.0% compared with a rate of 7.8% in April 2019. This figure amounts to about 84,400 persons. No survey was undertaken in 2020 due to COVID-19 as such the unemployment rate for April 2020 is unavailable. Notably, a decline in the labour force by 40,500 persons to 1,206,000 in April, relative to the same period in 2019 contributed to the improvement in the unemployment rate. When compared with January 2020 when Jamaica recorded its pre-COVID-19 employment high, employment levels have improved and have been doing so since July 2020, as the economy gradually reopened and restrictions were relaxed.
• The PIOJ expects pre-COVID-19 employment levels should be attained in the fiscal year 2022/23. This will be influenced by continued recovery in the tourism sector, and higher private consumption, which will drive the demand for goods and services and the need for labour to facilitate their production. Notwithstanding, the spread of the delta variant of the coronavirus has resulted in tightened restrictive measures including earlier curfews and no movement days. This may force employers to cut staff hours or even lay off some workers and cause a rise in the unemployment rate.

(Source: JIS News & NCBCM Research)

• Fitch Solution has revised its Grenadian real GDP growth forecasts to 1.4% in 2021 and 6.6% in 2022, from 5.5% and 3.8% previously, reflecting the prolonged impact of the COVID-19 pandemic on the tourism and services sector. Real GDP contracted by an estimated 13.8% in Grenada in 2020 as global mobility restrictions severely depressed international tourism.
• It is anticipated that global tourism will be slow to recover in the coming quarters due to the rising threat of COVID-19 variants, which will dissuade potential travelers from visiting smaller economies such as Grenada.
• That being said, the reopening of St. George's University and continued government stimulus will underpin modest growth in H221 before a stronger rebound in 2022.
• The revised forecasts imply the Grenadian economy will not fully recover until 2024, broadly in line with other Caribbean markets that rely on tourism to drive growth.

(Source: Fitch Solution)

• Barbados’ economy remains severely depressed by the ongoing global coronavirus pandemic. While tourism is expected to recover gradually in the second half of 2021 and the first half of 2022, risks to the outlook remain.
• Despite this very challenging environment, Barbados continues to make good progress in implementing its ambitious and comprehensive economic reform program, while expanding critical investments in social protection.
• Indicative targets under the Fund-supported program for end-June 2021 were met, and since then international reserves have been further boosted by the recent global SDR allocation.

(Source: IMF)

• U.S. and global equity benchmarks hit all-time highs on Monday, as the Federal Reserve appeared in no rush to step away from its massive stimulus. The S&P 500 and Nasdaq also rose to all-time highs as dovish remarks from the Fed last week bolstered optimism in an economic rebound and eased fears of a sudden tapering in monetary stimulus.
• The S&P 500 gained 0.43%, to 4,528.76 and was on track to finish the month up more than 3%, and the Nasdaq Composite added 0.9% to 15,265.72 as investors jumped into technology stocks. High-growth tech stocks tend to benefit from expectations of lower rates because their value rests heavily on future earnings.
• The Europe-wide STOXX 600 rose 0.07% and was on course to end August with a rise of more than 2% its seventh month of gains in what would be its longest such winning run in over eight years. Asian stocks hit a two-week high and Japan's blue-chip Nikkei closed up 0.5%.
• Overall the positive sentiment in equity markets was underpinned by the Fed Chair Jerome Powell speech in which he said that the tapering of stimulus measures could begin this year. Additionally, it was due to the announcement that there will be no immediate change in interest rates after its bond tapering. 

(Source: Reuters and NCBCM Research)