• The number of Americans filing new applications for unemployment benefits increased marginally last week, but the devastation unleashed by Hurricane Helene in the U.S. Southeast and strikes at Boeing and ports could distort the labour market picture in the near term.
• The report from the Labour Department on Thursday showed the labour market gliding at the end of Q3 2024, a state of affairs that could allow the Federal Reserve to be in no rush to deliver large interest rate cuts. The economy also ended the third quarter on solid footing, with another report showing services sector activity rose to the highest level in just over 1.5 years in September amid strong growth in new orders.
• Initial claims for state unemployment benefits increased by 6,000 last week to a seasonally adjusted 225,000 for the week ended September 28^th. Economists polled by Reuters had forecast 220,000 claims for the latest week. Unadjusted claims fell by 1,066 to 180,647 last week. The decline, however, was less than the drop of 5,692 that had been anticipated by the model used by the government to strip out seasonal fluctuations from the data.
• Overall claims are consistent with a stable labour market, which is being anchored by low numbers of layoffs. The calm, however, is likely to be temporarily shattered after Helene wreaked havoc in North Carolina, South Carolina, Georgia, Florida, Tennessee and Virginia late last week.
• Work stoppages by about 30,000 machinists at Boeing and 45,000 dockworkers at U.S. East Coast and Gulf Coast ports are also expected to muddy the labour market view. Though striking workers are not eligible for unemployment benefits, their industrial action is likely to ripple through the supply chain and other businesses dependent on Boeing and ports and cause temporary layoffs.
• Boeing has announced temporary furloughs of tens of thousands of employees. Claims in Washington state, where the planemaker has major production facilities, rose last week above their recent average. Economists are divided on the magnitude of the hit from Helene, with some estimating that claims could jump to 250,000 in the weeks ahead. Others argued the impact would be minimal.

(Source: Reuters)

• A major union for U.S. dockworkers and the United States Maritime Alliance agreed on Thursday to a tentative deal on wages and have extended their existing contract through Jan. 15 to provide time to negotiate a new contract. The move ends a strike that had snarled East Coast and Gulf Coast ports since the beginning of the week and threatened U.S. supply of fruits, automobiles and other goods.
• “The International Longshoremen’s Association and the United States Maritime Alliance, Ltd. have reached a tentative agreement on wages and have agreed to extend the Master Contract until January 15, 2025, to return to the bargaining table to negotiate all other outstanding issues,” The ILA and the USMX said in a joint statement.
• During the week, the strike had already started to stress the U.S. supply chain. Thousands of containers had been dumped at the wrong ports, and billions of dollars in goods were anchored offshore because ports were not operational, CNBC previously reported. Shipping costs had already started to rise.
• The strike was the first by the ILA since 1977. It impacted operations at 14 different ports. About 50,000 of the union’s 85,000 members were on strike this week. In a statement on Tuesday, ILA President Harold Daggett said the union was asking for an increase of $5 per hour for each year of the six-year contract.
• ILA wages will increase 61.5% over six years under the tentative agreement, sources told CNBC’s Lori Ann LaRocco. A central conflict over port automation is still under negotiation.

(Source: CNBC)

• Following the announcement of Christopher Williams' retirement as Charter CEO of PROVEN Management Limited (PML) effective January 31, 2025, the Board of Directors has appointed Johann Heaven as the new CEO, starting February 1, 2025.
• Mr. Heaven, a co-founder of PROVEN Group Limited, brings over 25 years of experience in finance and banking. He currently serves as Deputy CEO of PML, where he leads the finance, planning, and investment functions, while also overseeing the Treasury, Asset Management, and Information Technology teams. Previously, he was the President and CEO of PROVEN Wealth Limited, the Group’s wealth management company in Jamaica.
• While Mr. Williams will retire from daily executive operations, he will remain an active director of PML, a significant shareholder, and a member of the Investment Management Committee. He will also continue to serve as a Board Director for several subsidiaries of PROVEN Group. His strategic insight, guidance, and expertise will remain invaluable to the ongoing success and development of the organization.
• With the evolution of PROVEN Group from an investment management company to a conglomerate structure, the role of the PML CEO and the subsidiary CEOs must also evolve. Consequently, the CEOs of the respective subsidiaries will serve as the primary public representative of each subsidiary/pillar of the Group. These CEOs will report to their respective Board of Directors, with dotted line reporting to the PML CEO. The PML CEO will be responsible for directing the strategic planning process across the Group, capital allocation, stakeholder reporting and relations, and will also oversee the Shared Services teams (Treasury, Asset Management, IT, People).
• The Board of Directors of Proven Bank (Cayman) Limited (PBC) has also announced the appointment of a new President and CEO designate, subject to CIMA approval. Since the untimely passing of Benjamin Freeman in August 2023, the position has remained vacant but is anticipated to be filled by an experienced candidate effective November 1, 2024.
• Shareholders have expressed concerns regarding the deterioration in the company's performance and the suspension of dividend payments, which have negatively affected the company’s share price. Proven has attributed these challenges to inflationary pressures, elevated interest rates, narrowing interest spreads and its impact on overall performance. Since the start of the year, PROVEN’s share price has fallen by 32%,  and the Group has recorded  a year-to-date loss of US$1.37Mn.
• With the recent interest rate reductions, we anticipate a gradual decrease in funding costs across the group and an increase in net interest income as the interest rate spread widens. Combined with the ongoing organizational restructuring, this could enhance the company’s financial performance in H2 2025 (Starting October 2024) and FY26 (Starting April 2025). While we expect to see some improvements in the second half of the year, it may take time for the full effect of these changes to materialize.

 (Source: JSE & NCBCM Research)

• Following the damage caused by Hurricane Beryl in early July, Fitch Solution is lowering its 2024 real GDP growth forecast for Jamaica from 2.4% to 0.5%. In 2025, Fitch expects that growth will come in at 2.3% – compared to 1.3% between 2015 and 2019 before the pandemic.
• Initial Q2 real GDP growth data has disappointed, coming in at 0.1% y-o-y, according to the Planning Institute of Jamaica (PIOJ). Through H2 2024, Fitch Solution expects quarterly growth to average 0.2% y-o-y driven by a slowing US economy. Given that tourism accounts for around 25% of employment and 30% of GDP, a slowing US economy - a key supply market - will weigh tourist arrivals and visitor expenditure. Fitch Solutions’ views on the US economy are that it will lose momentum around Q4 2024 continuing through early 2025.
• Additionally, weighing on growth in 2024 will be the effects of Hurricane Beryl. The UN found that the hurricane caused US$12Mn of infrastructure damage and US$15.9Mn of farmland damage.
• Notwithstanding the disappointing growth, Fitch Solutions expects that Jamaica’s GDP Growth will rebound in 2025, supported by net exports, contributing 0.8 percentage points (pp) to its growth forecast and a rebounding tourism sector in 2025. As US economic activity increases, Fitch anticipates higher discretionary spending on travel. Consequently, Jamaica is poised to see a significant uptick in tourism arrivals, which will drive growth in the hospitality sector.
• Additionally, the relaxed monetary policy, especially the 50 basis point (bps) reduction by the Fed, is expected to create a favourable global investment climate. Fitch expects this outcome would support a 0.2pp increase in investment to Jamaica as the US economy picks up in H2 2025.
• The risks to the forecast are generally balanced. Fitch maintains its core outlook that the US economy will slow between the second half of 2024 and the first half of 2025. However, there is a possibility that growth could exceed expectations, particularly if there is stronger consumer spending driven by the Fed's easing policies. Should US growth outperform Fitch’s projections, Jamaica is likely to benefit from increased tourism and remittances.
• On the downside, Jamaica, like many other Caribbean nations, faces inherent risks from natural disasters. Coupled with the effects of climate change, an extreme weather event could adversely affect tourism and the manufacturing of export-oriented goods.

(Source: Fitch Solutions)

• Brazil's upgraded credit rating by Moody's highlights that the risk premium in the country’s local yield curve does not reflect its fundamentals and should be reduced, Finance Ministry officials told Reuters on Wednesday, October 2, 2024.
• Tuesday's upgrade to Brazil’s long-term issuer and senior unsecured bond ratings to Ba1 from Ba2, coupled with its Positive outlook meant the country is one notch from regaining investment grade status.
• The upgrade reflects material credit improvements, which Moody’s expects to continue, including a more robust growth performance than previously assessed and a growing track record of economic and fiscal reforms that lend resilience to the credit profile.
• The credit agency also noted that the credibility of Brazil's fiscal framework is still moderate. However, its relatively high cost of debt, robust growth and consistent fiscal policy adherence to the fiscal framework should allow the debt burden to stabilise in the medium term, albeit at relatively high levels.
• Brazil’s positive rating outlook reflects the possibility that steady growth and compliance with the sovereign’s fiscal framework will help enhance institutional credibility and reduce borrowing costs more markedly than currently assumed. 
• Speaking anonymously, a senior ministry official said Moody's action, taken amid strong market scepticism reflected over Brazil's fiscal outlook, would help restore normality. "The revision, together with the maintenance of a positive outlook, should start to encourage non-resident inflows, as they tend to anticipate investment-grade status," the official said. "As it becomes credible that we'll regain investment grade by 2026, the movement should intensify by 2025."

(Sources: Reuters & Moody’s Investor Services)

• The Guyanese government is finalising arrangements to begin making fiscal contributions to the Protected Areas Trust (PAT) Fund, as part of its drive to advance biodiversity protection efforts.
• This was confirmed by Permanent Secretary (PS) of the Ministry of Natural Resources, Joslyn McKenzie, during an address at the PAT’s 10th anniversary celebration. McKenzie noted that the agreement marks the fulfilment of yet another commitment by the government as it seeks to expand the work of the PAT.
• PAT was established in 2014 to fund and manage the National Protected Areas System (NPAS). Through the Protected Areas Commission, PAT supports projects that conserve biodiversity and maintain ecosystem services within Guyana’s protected areas. This is achieved by using revenue from its endowment fund – the Protected Areas Trust Fund (PATF).
• The PATF was originally endowed with US$8.5Mn, but the organisation receives funding from international donors, private sector donations and endowment fund investments, among other avenues. PS McKenzie explained that the government’s financial contribution will advance efforts to double the size of protected areas.
• Of note, during his recent addresses at the United Nations General Assembly and several sideline engagements, President Dr Mohamed Irfaan Ali reiterated Guyana’s commitment to doubling its protected areas by December 2025 and achieving the global biodiversity target of protecting 30 per cent of its land and marine areas by 2030. The permanent secretary reinforced the president’s vision and said that the country is on track to achieving this ambitious target.

(Source: Guyana Chronicle)

• The U.S. central bank's 50 basis-point (bps) interest rate cut last month was an acknowledgement that its policy rate was "out of sync" with where the economy stands, but not a sign that the battle with inflation is finished, Richmond Federal Reserve President Thomas Barkin said on Wednesday. However, President Barkin also said that of a further 50bps Fed cut over the rest of the year further "takes a little bit of the edge off.
• Barkin, a voter on the Fed's interest rate policy this year, supported the 50bps cut delivered by the U.S. central bank on Sept. 18.  The Fed is expected to cut rates by 25bps at its Nov. 6-7 meeting, a move that would lower the benchmark rate to the 4.50%-4.75% range.
• Before that meeting, the U.S. government will have released the employment reports for September and October and inflation data for September. Fed policymakers also will have to assess any fallout from the ongoing port strikes affecting the U.S. East Coast and Gulf Coast, and also the risks inherrent in the intensification of Middle East conflict.
• Barkin said he remains cautious about inflation amid continued strong economic growth, and felt the job market could grow tighter rather than weaker in the months ahead. "There is still work to do on inflation," Barkin said, noting that the personal consumption expenditures price index stripped of volatile food and energy items, or core PCE, is still at 2.7%. He said he does not expect it to decline much more until next year.
• The Fed targets an annual headline inflation rate of 2%. The core PCE figure is considered a guide to how the headline rate will behave in the future. Barkin said that while some aspects of the economy make it seem that "disinflation" will continue, "it remains difficult to say that the inflation battle has yet been won."
• U.S. labour unrest and geopolitical conflicts could push up prices. Additionally, the job market may move in unexpected ways, Barkin said. While much of the Fed's discussion has been about preventing the current 4.2% unemployment rate from rising further, Barkin argued that if the economy continues to grow and demand increases, "employers running lean could well find themselves short" of workers and need to hire.

(Source: Reuters)

• U.S. manufacturing held steady at weaker levels in September, but new orders improved, and prices paid for inputs declined to a nine-month low. The improvement coupled with falling interest rates bodes well for a rebound in activity in the coming months.
• The Institute for Supply Management (ISM) said on Tuesday that its manufacturing Purchasing Managers' Index (PMI) was unchanged at 47.2 last month. A PMI reading below 50 indicates a contraction in the manufacturing sector, which accounts for 10.3% of the economy.
• It was the sixth consecutive month that the PMI remained below the 50 threshold, but above the 42.5 level that the ISM said over time generally indicates an expansion of the overall economy. The survey has, however, exaggerated the weakness in manufacturing, with the so-called hard data, such as factory production and durable goods orders, showing the sector largely moving sideways.
• Gross domestic product data last week showed manufacturing output rising at a 2.6% annualized rate in the second quarter, an acceleration from the 0.2% pace posted in the January-March quarter. Further gains are likely after the Federal Reserve cut interest rates last month for the first time since 2020.

(Source: Reuters)

• Minister of Tourism, Hon. Edmund Bartlett, says Jamaica has proactively prepared its citizens to seize emerging opportunities within the tourism industry. He noted that the ministry has been equipping the populace to take advantage of the myriad opportunities, especially in leadership roles,” he told JIS News.
• The government has implemented a variety of innovative educational programs aimed at enhancing the skills and qualifications of individuals aspiring to occupy senior positions within the sector. “We recognise that a well-trained workforce is essential for the sustainability and growth of our tourism industry. Our educational programmes are designed to empower individuals with the knowledge and skills necessary to excel and lead in this dynamic field,” he said.
• He emphasized that the initiatives undertaken by the Ministry and its public agencies have showcased the transformative potential of tourism, generating opportunities for the population and solidifying Jamaica’s status as a “first-rate and first-choice” destination.
• Additionally, the Tourism Innovation Incubator, established through the Tourism Enhancement Fund (TEF), seeks to identify and cultivate innovative ideas that have the potential to transform Jamaica’s tourism sector. Minister Bartlett noted that this year the program received 222 applications up from the 34 applications submitted in its inaugural year in 2022.
• Growth in the sector is estimated to have decelerated in Q2 2024 to 0.1% from 6.1% in Q1 and it is expected to have weakened in the immediate aftermath of Hurricane Beryl. Despite challenges posed by the hurricane, Jamaica’s tourism sector has shown resilience, welcoming more than 105,000 stopover visitors since the reopening of ports. As such, tourism growth could reaccelerate in H2 amid a favourable revision to the US travel advisory in July 2024, coupled with continued efforts from public and private stakeholders to improve the tourism product and appeal to international travellers.

(Source: JIS & NCBCM Research)

• Monthly output prices for producers in the Mining & Quarrying industry increased by 0.5% for August 2024 relative to July 2024, while prices in the Manufacturing industry fell by 0.7%.
• The upward movement in the index for the Mining and Quarrying industry was attributed to a 0.5% increase in the index for the major group ‘Bauxite Mining & Alumina Processing’. The other major group, ‘Other Mining & Quarrying’, increased by 0.1%. The contributing factor to these increases was the depreciation of the Jamaican dollar relative to the United States dollar.
• On the other hand, a 4.5% decrease in the index for the major category ‘Refined Petroleum Products’—attributed to lower crude oil prices in the international market—was the primary factor behind the decline in the Manufacturing industry index. However, this overall decrease was offset by a 0.1% increase in the index for the major group ‘Food, Beverages & Tobacco.’ This increase was mainly driven by rises in the indexes for the categories ‘Manufacture of Grain Mill Products, Starches and Starch Products’ (0.1%) and ‘Manufacture of Other Food Products’ (0.2%), resulting from general price increases and higher raw material costs.
• For the period August 2023 – August 2024, the point-to-point index for the Mining & Quarrying industry increased by 7.7%, reflecting a similar increase of 7.7% in the index for the major group ‘Bauxite Mining & Alumina Processing’.
• 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 experienced over time. Currently, the only industries being tracked are Manufacturing Industry and Mining and Quarrying.
• With international oil prices being a key driver of the ‘Refined Petroleum Products’ category, geopolitical tensions could have a material impact on the Manufacturing industry index in the near-to-medium term, if it results in a material rise in oil prices.  
• The impact has been limited since the onset of the Hamas-Israel conflict last year. However, oil prices climbed about 8.3% since Tuesday after Iran fired a salvo of ballistic missiles at Israel in retaliation for Israel's campaign against Tehran's Hezbollah allies in Lebanon. This increase highlights how rapidly escalating geopolitical conflicts in the Middle East can disrupt global energy markets.

 (Source: STATIN & NCBCM Research)