• U.S. consumer confidence declined for a third straight month in October amid persistent worries about inflation, higher borrowing costs and the political environment, a survey showed on Tuesday.
• The Conference Board said its consumer confidence index fell to 102.6 this month from an upwardly revised 104.3 in September. Economists polled by Reuters had forecast the index slipping to 100.0 from the previously reported 103.0.
• "Write-in responses showed that consumers continued to be preoccupied with rising prices in general, and for grocery and gasoline prices in particular," said Dana Peterson, chief economist at The Conference Board. "Consumers also expressed concerns about the political situation and higher interest rates. Worries around war/conflicts also rose, amid the recent turmoil in the Middle East."

(Source: Reuters)

• U.S. labour costs increased solidly in the third quarter amid strong wage growth while house price inflation accelerated in August, the latest signs that the Federal Reserve could keep interest rates high for some time. The reports on Tuesday pose a threat to efforts by the U.S. central bank to bring inflation to its 2% target.
• The Employment Cost Index (ECI), the broadest measure of labour costs, rose 1.1% last quarter after increasing 1.0% in the April-June period, the Labour Department's Bureau of Labour Statistics reported. Economists polled by Reuters had forecast the ECI would rise 1.0%.
• Labour costs increased 4.3% on a year-on-year basis, the smallest gain since the fourth quarter of 2021, after advancing by 4.5% in the second quarter. Growth in annual compensation is gradually slowing after peaking at 5.1% last year, in line with some easing in labour market conditions. It, however, remains well above the pre-pandemic pace.
• The rise in compensation helps to explain the surge in consumer spending last quarter, which contributed to the fastest economic growth rate in nearly two years.
• The ECI is widely viewed by policymakers and economists as one of the better measures of labour market slack and a predictor of core inflation because it adjusts for composition and job-quality changes. Since March 2022, the Fed has raised its policy rate by 525 basis points to the current 5.25%-5.50% range.
• Wages increased 1.2% in the third quarter after climbing 1.0% in the prior three months. Year-on-year, it was up 4.6% after advancing by the same margin in the second quarter. Strong wage growth is being driven by worker shortages that persist in some service industries.
• September's job openings data, scheduled to be released today, will shed light on the state of demand for labour.

(Source: Reuters)

• GraceKennedy Limited (GK) has announced that it has successfully completed its acquisition of Unibev Limited, a Jamaican manufacturing company specializing in fully integrated beverage solutions. The strategic transaction firmly cements GK's position as a leader in the Jamaican spring water market.
• Unibev is now GK's sixth manufacturing facility in Jamaica and is involved in the entire beverage production process, spanning from raw material sourcing to packaging.
• Commenting on this significant milestone, Group CEO Don Wehby expressed, "The acquisition of Unibev represents a pivotal move in GK’s pursuit of its 2030 vision, especially as it relates to advancing its presence within the growing Jamaican spring water market.
• Frank James, CEO of GK Foods ‐Domestic, underlined the strategic significance of this expansion, stating that the company is actively capitalizing on opportunities to grow its beverage brands. Beyond the advantages for its spring water business, this acquisition aligns seamlessly with the company’s manufacturing transformation strategic plan, aimed at strengthening its competitive edge and positioning GK as a regional leader in food and beverage manufacturing.
• GK continues to seize opportunities to grow its beverage brands by expanding its manufacturing segment.

(Source: JSE)

• Jamaica is on a drive to attract more than half a million Canadian visitors to the island by 2025, a 20 per cent increase over the current figure of about 400,000.
• Regional Director for Canada for the Jamaica Tourist Board, Angella Bennett, revealed the ambitious goal while addressing the dinner & awards ceremony for the Sandals 27th Annual Baxter Canadian Golf Tournament, held at Sandals Ochi, in St. Ann, on October 28.
• She outlined that several endearing factors will help Jamaica to reach this “achievable target”, most notably the resilience of the Canadian tourism market.
• Over two days, October 27 and 28, more than 60 travel advisors and various stakeholders from Canada joined the golf tournament hosted at the Sandals Golf Upton Estate Country Club in St. Ann. It is expected that the event will have a positive impact on enhancing Jamaica’s reputation as a premier golfing destination, further promoting the island’s allure to golf enthusiasts and ultimately increasing the value of Jamaica’s tourism product.
• Currently, Canada’s stopover arrivals for this year are expected to outpace 2022’s figure by more than 40 per cent, according to Ms Bennett.

(Source: JIS)

• Environmental stresses associated with El Nino weather conditions could add to the fiscal, growth, inflationary and external liquidity challenges facing vulnerable sovereigns within the region, according to Fitch Ratings.
• The El Nino phenomenon can be associated with unusually dry conditions in some parts of the world and with greater-than-normal levels of rain in others. Environmental conditions that dampen economic activity could hurt the credit profiles of vulnerable sovereigns that face tight access to financing or have a record of ratcheting up debt during crises.
• Further, lower crop production may reduce exports or raise imports of food products, adding to external liquidity stress and possibly local inflation. The impact on hydropower output could also be economically significant.
• Highly rated sovereigns have more room to mitigate the effect of adverse weather conditions and their export sectors and economic activity are generally more resilient. However, they may be affected indirectly. For instance, El Nino conditions could influence prices for globally traded food commodities, affecting their inflation and monetary policy decisions.
• Governments can deploy subsidies or transfers to mitigate the effect of rising food prices, but this weighs on fiscal metrics. Moreover, after the COVID-19 pandemic and subsequent periods of high global inflation, many governments have less fiscal headroom.
• Nonetheless, the Food and Agriculture Organization of the United Nations expects global cereal production in 2023 to be slightly above the previous record in 2021. If this bears out, it should provide a buffer against the risk of disruption to output in 2024; and suggests any impact from the El Nino on global food prices in aggregate should be limited.

(Source: Fitch Solutions)

• Panama has been removed from the grey list of financial crime watchdog FATF (The Global Financial Action Task Force). This register includes countries deemed to be doing too little to combat money laundering.
• Panama's first stint on the FATF's so-called grey list, which can impact a country's investment ratings and reputation, was from 2014 to 2016. It was readded in 2019.
• Panama's Deputy Financial Minister Jorge Almengor had told Reuters in June he expected Panama to be excluded from the list this month; after authorities had addressed the requests to boost financial transparency.
• Furthermore, the systematic changes made by the government in the financial sector are solid enough for the country not to rejoin the list in the future, noted the Economy and Finance Minister.
• Almengor had said this was an urgent issue so Panama could reclaim its place as a financial hub. Panama's President Laurentino Cortizo celebrated the decision on social media platform X, formerly Twitter.

(Sources: Reuters & Swiss Info)

• Eurozone inflation will have almost fallen back to the European Central Bank's 2% target in 2025, but economic growth will remain weak and at below 1% through next year, the ECB's quarterly Survey of Professional Forecasters showed on Friday.
• The ECB left interest rates unchanged on Thursday after the steepest set of hikes on record, arguing that inflation was finally back on track towards 2%, even if high energy costs continued to pose an upside risk. Friday's survey, a key input in the bank's policy deliberation, confirmed this outlook, predicting relatively slow but persistent disinflation over the coming two years.
• The survey sees consumer price growth at 2.7% next year, the same figure predicted three months ago but well below the ECB's own 3.2% expectation. The 2025 figures were meanwhile lowered to 2.1% from 2.2% and the longer-term forecast, defined as 2028, remained unchanged at 2.1%.
• The figures are likely to bolster market expectations that eurozone rate hikes are over after ten back-to-back hikes, and may fuel expectations that the ECB will start reversing course around mid-2024. On growth, the survey showed increasing gloom in the outlook though it differed little from the ECB's own staff projections.
• The 2025 GDP growth forecast was cut to 0.9% from 1.1% while 2025 remained unchanged at 1.5%. Unemployment forecasts were barely changed, likely comforting policymakers, as labour market resilience will support consumption and limit the pain caused by the record-high rates.

(Source: Reuters)

• Consumer spending in the United States saw a significant increase in September, driven by higher purchases of motor vehicles and increased travel. This trend is expected to continue into the fourth quarter.
• The rise in consumer spending was accompanied by elevated inflation readings, particularly in services like housing. However, there is a belief that spending will cool off in early 2024 as accumulated pandemic savings are depleted.
• The strong consumer spending contributed to rapid economic growth, but it's unlikely to match last quarter's performance. Savings rates have dropped, and personal income has seen limited growth, which is causing concern about the sustainability of spending.
• Inflation remains a concern, with the Federal Reserve closely monitoring it. The Fed is expected to keep interest rates unchanged due to recent financial market conditions. Despite the inflation worries, some economists believe that U.S. households are financially healthy, with manageable debt levels and solid income.

(Source: Reuters)

• Dolla Financial Service Limited recorded a net profit of $102.47Mn for the quarter that ended September 30, 2023. This represents a 46.1% yoy increase in profitability. Furthermore, for the nine months ending September 2023, profitability also increased to $328.11Mn from $188.05Mn.
• Net interest income for the quarter was up by 51.4% yoy to $248.55Mn. This was driven by increased loan portfolio expansion. Similarly, net interest income for the nine months increased by 69.3% yoy $737.99Mn.
• Operating expenses, including expected credit losses, totalled $155.69Mn, marking a $59.77Mn or 62.3% YoY increase for the quarter ended September. On the same note, operating expenses including expected credit loss were 80.5% higher in the nine months ended September 2023, when compared to the same period of last year. This was primarily due to an increase in staff capacity, regulatory and professional fees and intensified marketing efforts.
• Dolla's stock price has decreased by 11.8% since the start of the calendar year. The stock closed Thursday’s trading session at $2.54 and currently trades at a P/E of 13.4x which is above the Junior Market Financial Sector Average of 13.1x.
• The company recently announced its plans to expand further in the region. The expansion of its operation in other territories is part of its strategy to enlarge the company’s loan portfolio, allowing it to generate income and profit for its shareholders. At the end of September, its loans receivables net of expected credit losses amounted to $2.6Bn, which represents a massive jump of 125%. The company recently struck a deal with real estate brokerage firm Century 21 Heave-Ho Properties Limited to become the preferred financing partner for short-term loans to its clients and agents, covering home purchase fees and incidentals.
• The financing arrangement is an extension of a previous pact signed between the two companies that will see Dolla Financial and its subsidiary Ultra Financier handing over real estate business to the brokerage, including powers of sale for foreclosures and sale of properties used as collateral for loan agreements. The partnership with Century 21 would make Dolla’s fifth partnership in recent times aimed at widening its client base.

(Sources: JSE & NCBCM Research)

• There was a 0.1% increase in output prices for producers in the Mining and Quarrying industry for September 2023, while prices in the Manufacturing industry went up by 1.2%.
• The increase in the Mining and Quarrying industry was mainly a result of the depreciation of the Jamaican dollar against its United States counterpart. The index for the other major group ‘Bauxite Mining & Alumina Processing’, also increased by 0.1%.
• The main contributor to the 1.2% increase in the Manufacturing industry was a 5.9% increase in the index for the major group ‘Refined Petroleum Products’, due mainly to higher fuel prices on the international market. The index for the heaviest-weighted major group within the industry, ‘Food, Beverages & Tobacco’, had a negligible increase. The group ‘Production, Processing & Preserving of Meats, Fish, Vegetables, Oils and Fats’ increased by 0.1% as a result of a 0.2% rise in the sub-group ‘Meat & Meat Products and Fish & Fish Products’. This was due to higher costs of production for processed meat during the review period
• For the period September 2022 – September 2023, the index for the Mining and quarrying industry increased by 6.5%. This was a result of a 6.6% rise in the index for the major group ‘Bauxite Mining & Alumina Processing’. The point-to-point index for the Manufacturing industry rose by 1.9%, due primarily to an increase of 2.7% in the index for the major group ‘Food, Beverages & Tobacco’. However, these movements were tempered by a 4.3% decline in the index for ‘Fabricated Metal Products excl Machinery & Equipment’.
• 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 experience over time. There was a minor dip in the PPI in June, however, the decision by OPEC+ to curtail oil supply could potentially further escalate producer prices. This is because a reduction in oil supply could drive up costs related to transportation and electricity.

(Source: STATIN)