• U.S. business activity was steady in September, but average prices charged for goods and services rose at the fastest pace in six months, potentially hinting at a pickup in inflation in the coming months.

• S&P Global said on Monday that its flash U.S. Composite Purchasing Managers' Index (PMI) Output Index, which tracks the manufacturing and services sectors, was little changed at 54.4 this month compared to a final reading of 54.6 in August. A reading above 50 indicates expansion in the private sector.

• September's reading aligns with reports this month, including retail sales, that have suggested the economy maintained its solid growth momentum in the third quarter. However, uncertainty about the Nov. 5 presidential election is weighing on business sentiment.

• The services sector continued to expand at a steady pace, though manufacturing slumped to a 15-month low. Average prices charged for goods and services rose at their quickest pace since March, marking the first acceleration of selling price inflation in four months. The survey's measure of prices paid by businesses for inputs increased to a one-year high of 59.1 from 57.8 last month. Its gauge of prices charged rose to 54.7 from 52.9 in August.

• Rising costs, mostly in the services sector linked to wage raises, were attributed for the increase. At face value, this would suggest that price pressures were building up again, but there is growing evidence that inflation is cooling. That is, the labour market has slowed considerably this year, with the unemployment rate rising above 4.0% from 3.4% in April 2023 and is likely no longer a threat to inflation.

• "The early survey indicators for September point to an economy that continues to grow at a solid pace," said Chris Williamson, chief business economist at S&P Global Market Intelligence. "A reacceleration of inflation is meanwhile also signaled, suggesting the Fed cannot totally shift its focus away from its inflation target as it seeks to sustain the economic upturn."

(Source: Reuters)

• Euro zone business activity contracted sharply and unexpectedly this month as the bloc's dominant services industry flatlined, while a downturn in manufacturing accelerated, a survey showed on Monday. The downturn appeared broad-based with Germany, Europe's largest economy, seeing its decline deepen while France - the currency union's second biggest - returned to contraction following August's Olympics boost.

• That fueled bets for more policy easing by the European Central Bank and the euro fell sharply.

• HCOB's preliminary composite euro zone Purchasing Managers' Index (PMI), compiled by S&P Global, sank to 48.9 this month from August's 51.0, below the 50 mark that separates growth from contraction for the first time since February.A Reuters poll predicted a modest decline to 50.5.

• Overall demand fell at the fastest rate in eight months. The new business index plunged to 47.2 from 49.1. A services PMI sank to 50.5 from 52.9, below all expectations in the Reuters poll, which had predicted a more modest decline to 52.1. Euro zone government bond yields tumbled on the data, with yields on German debt falling the most.

• Germany's economy contracted 0.1% in the second quarter and Monday's survey suggested it had extended its downturn in the third. A recession is normally defined as two consecutive quarters of contraction. "A technical recession seems to be baked in," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, forecasting Germany's economy would shrink by 0.2% this quarter.

(Source: Reuters)

• For the year ending June 2024, Fontana’s earnings fell by 10%, despite robust topline growth as expenses climbed.
• Revenues rose 10% owing to the contribution from the company’s seventh retail store, which opened Portmore, accounting for much of this increase. For the year revenues totaled $8.13Bn, Fontana’s highest annual revenue to date. With the new location customer count and transaction size improved, and there was growth across all product lines and segments.
• Notwithstanding the topline growth, expansion efforts can be costly, as evidenced by the 23.3% increase in operating costs following the opening of Fontana’s Waterloo store in 2020. This year mirrored that trend, with operating expenses rising by 25.5% to reach $2.36Bn in 2024. The increase was largely driven by costs related to the new Portmore store, including salaries and staff training, as well as expenses for the company’s 55th-anniversary celebration. With the increase in costs, operating profit declined by 6.6%.
• Furthermore, the taxation charge increased significantly to $40.05 million due to the company entering the second phase of its tax benefits in January 2024, which offers a 50% tax remission compared to the 100% remission received in the first phase.
• Fontana’s stock price has decreased by 24.1% since the start of the calendar year. The stock closed Thursday’s trading session at $7.60 trading at a P/E of 16.2x, below the Junior Market Distribution Sector Average of 19.0x.
• The back-to-school and holiday seasons have traditionally been strong periods for the company’s finances, and we anticipate similar trends for 2025. However, with the economy showing signs of slowing and projected to contract, the company may encounter challenges that could impact its performance.

(Source: JSE & NCBCM Research)

• Agriculture, Fisheries and Mining Minister Hon. Floyd Green is advocating for enhanced collaboration between the local engineering industry and the agricultural sector to bolster food security. His call emphasises the importance of developing machinery and equipment that can improve productivity and resilience in farming.
• Speaking at the Jamaica Institution of Engineers’ Engineers Week Conference on September 17^th, Minister Green highlighted the critical role engineers play in adapting agriculture to the increasing frequency and severity of climate-related weather events. He stated, “Agriculture and engineering go hand in hand,” and urged engineers to focus on transforming traditional agricultural practices into more efficient and productive processes.
• The Minister underscored engineers’ technical expertise as essential for designing and implementing the necessary infrastructure to address climate challenges. He cited the Essex Valley Irrigation Scheme, which aims to provide irrigated water to 1,200 hectares of arable land in south St. Elizabeth and south Manchester through the construction of wells and related infrastructure.
• Reflecting on the recent impacts of Hurricane Beryl, Minister Green pointed to the significant agricultural losses, which included 688,000 square feet of destroyed greenhouses affecting 224 farmers and resulting in an estimated cost of $856Mn. He emphasized the necessity of innovating greenhouse designs to withstand stronger storms, stating that these structures are crucial for maintaining food supply during adverse weather conditions.

 (Source: JIS)

• Brazilian authorities are likely to reinstate daylight saving time after five years of abolishment, as the country faces a major drought, affecting its power generation efforts. Daylight saving time refers to advancing clocks to make better use of the longer daylight available during summer so that darkness falls at a later clock time.
• The prolonged drought shifted toward using more expensive thermoelectric plants and energy imports, which is boosting power bills. Despite the growth of wind and solar power in Latin America's largest economy in recent years, more than half of Brazil's power supply still comes from hydroelectric plants.
• The drought has affected some of the country's largest hydroelectric plants, including two powered by an Amazonian river. Reservoir levels in the key Southeast/Center-West region, Brazil's main hydroelectric area, are expected to end September below 50%, as the region also gets less than 50% of the average rainfall for this time of year.
• Former President Jair Bolsonaro abolished daylight saving time after he took office in 2019, on grounds that it was no longer benefiting the country's power sector. By moving the clocks forward an hour between November and February, Brazil’s summertime aimed to make use of more daylight hours and save energy.
• However, officials now believe that reinstating it could help alleviate pressure on the power system in late afternoons, when consumption is at its peak but solar power stations stop generating electricity as the sun sets.
• Some sectors have cheered the possibility while others would likely be negatively impacted. Bars and restaurants backed the move, with local association Abrasel saying the extra hour of daylight would help increase the number of clients at 6-8 p.m. and could drive monthly revenues up 10% to 15%. Moving clocks forward by one hour, however, would affect flight schedules, forcing airlines to adjust the departure and arrival times of their flights and connections while facing additional costs to relocate crews.

(Source: Reuters)

• Three State agencies under the oversight of the Ministry of Energy, National Energy Corporation, National Petroleum and Paria Fuel Trading Company, signed a Memorandum of Understanding (MOU) on September 18, to collaborate on positioning Trinidad and Tobago (T&T) as the Caribbean's first low-carbon marine bunkering hub.
• The MOU commits the three agencies to immediately conduct a feasibility study that will evaluate the potential to supply low-carbon marine fuels (such as methanol) to ships operating on trade routes throughout the Caribbean, a statement from the Energy Chamber said.
• That study is expected to conclude by April 2025, after which an implementation plan will be developed, to make the hub operational by 2026.
• 'This is not uncharted territory for National Energy,' said National Energy chairman Dr Joseph Khan, chairman of National Energy. 'In 2023, we introduced Trinidad and Tobago's first low-emission tug, marking a major step in reducing emissions from our maritime operations. This next move strengthens our position as a regional leader and will attract cleaner vessels to our ports.'
• 'Our facilities are equipped to meet the growing demand from international ships seeking cleaner fuel alternatives.' Paria chairman Newman George said: 'Paria's infrastructure and market intelligence enables us to run reliable and efficient terminals for both petroleum products and cleaner fuels. This aligns with the global industry's shift towards low-carbon solutions.'
• T&T's creation of a low-carbon bunkering hub prepares the country for future environmental regulations, making it an attractive destination for vessels operating under stricter standards, the statement added.

(Source: Trinidad Express Newspaper)

• A big interest rate cut from the U.S. Federal Reserve on Wednesday raised bets on further policy easing at the European Central Bank in October, but this is still not the most likely outcome given different economic realities.
• The ECB has already cut interest rates in June and earlier this month, and many at the bank have hinted at steady, quarterly rate cuts ahead to make sure inflation is defeated on a durable basis.
• While the Fed's apparent rush lends some support to arguments that the ECB is falling behind the curve, given rising recession risks, the fundamental economics have not changed overnight, so policy hawks on the Governing Council can argue for waiting until December.
• This is also reflected in the market pricing a 35% chance of a 25 basis point (bps) deposit rate cut in October, up from 30% a day ago. The 5% increase is small but still, a notable shift that leaves December as the most likely date for an ECB move.
• The ECB is likely to take it slower because it has a lot less to do. It has five, maybe six 25bps cuts until it reaches a "neutral" interest rate level at around 2.0% or 2.25%, according to ECB's and other estimates. The Fed meanwhile has probably eight such reductions until then, so the world's top two central banks might still reach their end point of policy easing at the same time.
• While Eurozone rate cuts are on the radar, inflation, now at 2.2%, could tick up towards 2.5% by the end of the year. Thereafter, inflation will likely slow to 2% by the end of 2025 as Entrenched wage pressures keep service costs elevated. This is why conservative policymakers, or hawks in market jargon, have cautioned against moving too fast.

(Source: Reuters)

• The Bank of England (BoE) held interest rates at 5.0% on Thursday and voted to run down its stock of British government bonds by another 100Bn pounds ($133Bn) over the coming 12 months, a move that could weigh on the government's finances.
• The Monetary Policy Committee voted 8-1 to keep rates on hold. Only external member Swati Dhingra voted for a further quarter-point rate cut after last month when the BoE delivered its first reduction to borrowing costs since 2020.
• Economists polled by Reuters had forecast a 7-2 vote to keep rates on hold after last month's tight 5-4 decision to cut rates from their previous 16-year high.
• The BoE struck a more cautious tone regarding its inflation pressures than the Fed with Governor Andrew Bailey stating that cooling inflation pressure meant the BoE should be able to cut rates gradually over the months ahead. "But it's vital that inflation stays low, so we need to be careful not to cut too fast or by too much," he said in a statement.
• Investors think the British central bank will cut rates more slowly than the Fed over the next year, citing more persistent inflation pressure. The BoE said inflation was likely to rise to around 2.5% by the year's end from 2.2% in the most recent data, compared with a previous forecast of around 2.75%. Lower oil prices contributed to the downgrade.
• Financial markets now expect the BoE to cut rates in quarter-point moves four or five times by June. By contrast, they see around seven such cuts in the U.S., even after its outsized move on Wednesday.

(Source: Reuters)

• The Development Bank of Jamaica's flagship initiative, the Boosting Innovation, Growth, and Entrepreneurship Ecosystems (BIGEE) Programme, is dedicated to empowering local micro, small, and medium-sized enterprises (MSMEs) while promoting innovation throughout the country.
• This five-year programme is supported by a US$25Mn loan from the Inter-American Development Bank (IDB) and a US$8.2Mn grant from the European Union (EU) to enhance Jamaica’s entrepreneurial landscape and support MSMEs.
• David Wan, Acting Managing Director of the DBJ, shared during a Jamaica Information Service (JIS) Think Tank on September 17 that the programme enables innovative businesses to grow, scale, and increase their competitiveness locally and globally through funding, technical assistance, and mentorship.
• “Since its launch, the programme assisted entrepreneurs in transforming ideas into sustainable businesses, fostering a culture of innovation, and creating numerous growth opportunities within the MSME sector” he noted.
• Grants from the BIGEE programme are awarded to MSMEs with innovative products or services that have the potential to drive economic benefits, create new jobs, and inspire other companies to enter similar markets.
• The is accredited by the Green Climate Fund (GCF), which is a critical element of the historic Paris Agreement – the world’s largest climate fund, mandated to support developing nations’ move towards low emissions and climate-resilient pathways in keeping with the UN Sustainable Development Goals (SDGs).
• The government, through the Development Bank of Jamaica (DBJ), remains committed to supporting the MSME sector, which is crucial to the nation’s economy. As at June 2024, it was estimated that over 422,000 MSMEs are operating in Jamaica, employing approximately 80% of the workforce and contributing 44% to the country's GDP.

(Source: JIS)

• Eppley Limited has announced its acquisition of a significant stake in the Eppley Caribbean Property Fund Limited SCC – Value Fund (ECPF). The purchase, which represents approximately 18.7% of ECPF’s outstanding shares, took place on the Jamaica Stock Exchange and the Barbados Stock Exchange on September 13, 2024, through Eppley Fund Managers Limited (EFM), a wholly-owned subsidiary of Eppley Limited.
• ECPF stands as the largest listed real estate mutual fund in the Caribbean, with a portfolio of 39 properties totalling 1.2Mn square feet across Jamaica, Barbados, Trinidad, and St. Vincent.
• Eppley already manages ECPF through its subsidiary, EFM. With this latest acquisition, Eppley will become the largest shareholder of ECPF’s listed shares.
• Raymond Donaldson, CEO of Eppley Limited, emphasised the alignment of this transaction with Eppley’s investment philosophy. He noted that ECPF provides the ability to own a diversified portfolio of high-quality commercial real estate assets across our region and to earn attractive, reliable income and capital appreciation.
• Eppley Limited’s year-to-date profit has declined by 68.5%, mainly due to a bargain gain of $229.12Mn on the purchase of 47.0% of the shares of the ECPF, which led to a one-off increase in earnings in Q2 2023. As of Wednesday’s trading session, its stock price closed at $35.83, and a PE multiple of 26.5x, almost double that of the Main Market Financial Sector Average of 13.6x.

 (Source: JSE and NCBCM Research)