• Americans borrowed more than ever on their credit cards in the last quarter, the New York Federal Reserve Bank said on Tuesday, with balances surpassing $1 trillion for the first time even as overall household debt loads were largely unchanged.
• Credit card balances rose by $45 billion to $1.03 trillion in the second quarter, the regional Fed bank said in its latest quarterly household debt and credit report, reflecting robust consumer spending as well as higher prices due to inflation, researchers said.
• Household debt ticked up 0.1% to $17.06 trillion, as mortgage balances - the biggest portion, and typically the biggest driver, of overall household debt - were largely unchanged. Meanwhile, credit card delinquencies are at an 11-year high, as measured using a four-quarter average, the data showed.
• Mortgage originations increased to $393 billion in the April-June period, from a nine-year low of about $324 billion last quarter, the data showed. They remain much lower than the average in the first two years of the COVID-19 pandemic, reflecting the impact of the U.S. central bank's aggressive interest rate hikes over the past 15 months. Overall mortgage balances ticked down to $12.01 trillion, from $12.04 trillion in the prior quarter, reflecting some changes in credit reporting that are expected to reverse next quarter, New York Fed researchers said.

(Source: Reuters)

• The shortage of affordable housing in Canada is "a very serious challenge" that could ease as inflation eases and interest rates become more predictable, newly-appointed Housing Minister Sean Fraser told Reuters on Tuesday.
• The housing issue is one that the opposition Conservatives have seized on, with leader Pierre Poilievre last week citing figures showing rents and mortgage payments roughly doubling since the Liberals took power in 2015.
• Critics say one reason for the crunch is an immigration plan that seeks to attract more than 400,000 people a year, or 1% of the population, without addressing where newcomers will live.
• In 2022 the federal government announced plans to double construction over the next decade. With that being said though, housing starts numbers are projected to decline to 212,000 units in 2023 from 262,000 in 2022.
• Fraser said the pandemic hit supply chains, forcing up building costs. Additionally, the Bank of Canada lifted rates to a 22-year high in July and inflation in June stood at 2.8% compared to a peak of 8.1% in June 2022 which may have curtailed construction activity.
• The lower rate of inflation, and the potential for interest rates to stay stable, should give the building industry more confidence going forward, Fraser said in a phone interview.
• "We have an opportunity under this new, more stable environment to make a major difference." Fraser, immigration minister until the shuffle, ruled out major changes to official policy. "The answer to our housing challenges is not to welcome fewer newcomers. The answer to our housing challenges is to build more houses," he said.

(Source: Reuters)

• ISP Finance Services Limited (ISP) recently announced that the company has received the approval of the Bank of Jamaica to be granted a Microcredit Licence.
• The Microcredit License is another step in the company’s strategic direction following the recent appointments of directors Damion Duncan and David Lee.
• ISP continues to innovate and position its products and services for the convenience of a wider Jamaican public.
• This approval means that ISP has satisfied the requirements to continue its operations as a microcredit agency.
• The Microcredit Act, passed in January last year, is aimed at licensing and regulating microcredit institutions (MCIs) that provide financing to individuals, micro, small and medium-sized enterprises. Under the Act, the Bank of Jamaica is charged with general administration, as well as the supervision of microcredit institutions.

(Source: JSE)

• Electrical, lighting and solar products distributor Fosrich Limited recorded a net profit of $40.77Mn for the quarter that ended June 30, 2023. This represents a 70.7% yoy decrease in profitability. Similarly, profit for the six months ending June 2023 decreased by 45.5% to $162.50Mn.
• Revenue for the quarter was up by 4.7% yoy to $940.85Mn. On the other hand, revenues for the six months increased by 12.5% yoy $2.02Bn and was driven by increased sales in eight of its twelve product groups.
• Cost of Sales for the quarter amounted to $569.00Mn in the quarter ending June 2023, a 14.3% increase relative to last year’s. For the six months ending June, the cost of sales was up by 19.4% to $1.21Bn. This was driven by higher copper and PVC ingredient prices on the international market. Consequently, gross margin fell to 39.5% (from 44.6%) and 40.4% (from 43.8%) respectively, over three months and six months period ending June as increases in costs outpaced revenue growth.
• For the quarter, administrative expenses were 26.9% higher yoy at $266.52Mn, while for the six months, administrative expenses were up by 30.0%. The increases were driven primarily by increased staff-related costs for salary adjustments, increased sales commission due to improved sales performance, and improvements in staff benefits, among other expenses.
• FosRich’s stock price has decreased by 46.3% since the start of the calendar year. The stock closed Tuesday’s trading session at $2.10 and currently trades at a P/E of 72.3x which is above the Junior Market Distribution Sector Average of 15.2x.
• The company has announced that construction of its new Superstore & Corporate Offices at 76 Molynes Road has commenced. The completion date is projected to be Q2, 2024.  Additionally, the company recently announced that it was at the stage where it is ready to commence the production of transformers, which is expected to strengthen the partnership between the company and JPS while providing value for shareholders.

(Source: JSE)

• A bill has been presented to modify the nation’s general budget for the 2023 financial year. The proposal includes reallocating funds among different public entities, resulting in a reduction of 9.12Bn pesos for seven ministries and the chapter on the Administration of Public Debt and Financial Assets.
• The ministries most affected by the budget adjustments are Industry, Commerce and MSMEs with a decrease of 3.89Bn pesos, and Debt Administration with 3.01Bn pesos. Other ministries facing budget reductions include Tourism, Education, Energy and Mines, Labour, and Youth.
• On the other hand, the transferred funds will be distributed by the Ministry of Finance to various entities.
• The Presidency of the Republic will receive 5.58Bn pesos, followed by the Ministries of the Interior and Police, and Public Works and Communications. Other ministries benefiting from the funds include Foreign Relations, Defense, Agriculture, Culture, Finance, Economy, Higher Education, and the Ministry of Women.
• The bill aims to increase capital spending and current spending, with a focus on investments and projects with a high social impact. The Ministry of Finance also intends to rethink tax revenue goals and lower the debt limit approved by Congress.

 (Source: CariCris)

• Fitch Solutions expects the Bermudan economy will grow more slowly than the Caribbean's average of 3.1% over the next decade.
• Net exports will fuel the Bermudan economy's 2.0% average expansion in the 10 years ahead. Through 2032, net exports will contribute an average of 1.0 percentage points (pp)  to real GDP. Private consumption, investment and government consumption increases over the same period will also support overall economic activity.
• Notably, the increase in all GDP components will fuel the market’s 2.3% real GDP expansion in 2023, from an estimated 3.0% expansion in 2022. Net exports will add 1.2pp to GDP in 2023 after adding an estimated 1.8pp in 2022. Additionally, economic output in Bermuda will increase by 2.0% in 2024.
• Bermuda's fiscal accounts have remained in deficit in recent years, however, Fitch forecasts that this solid economic growth will narrow the fiscal deficit to 0.6% of GDP in 2023, from 1.0% in 2022. Revenues are expected to increase by 3.5% in 2023 after 11.3% growth in 2022. Expenditure will rise by 0.8% in 2023.
• In 2024, the fiscal deficit will narrow further to 0.2% of GDP, below its historical average of 2.7% from 2013 to 2022. The improved economic and fiscal performance will allow total government debt levels to fall to 26.2% of GDP by 2032, from 42.2% of GDP in 2023, as growth in revenues outpaces the rise in expenditure.

(Source: Fitch Solutions)

• British employers reduced the number of new permanent staff they hired through recruitment agencies by the most since mid-2020 last month due to concerns about the economic outlook, adding to signs that the market is becoming tougher for job seekers.
• A gauge of permanent staff hiring by the Recruitment and Employment Confederation and Accountants KPMG fell to 42.4, the lowest since the 34.3 reading in June 2020 when the country was in lockdown due to the COVID-19 pandemic.
• The survey's measure of temporary staff hiring, which often rises when employers are cautious about the outlook, in July showed the weakest growth in nine months - partly because more workers were looking for the security of permanent roles. Neil Carberry, chief executive of REC, said the jobs market remained "fairly robust" despite the slowdown in permanent placements."To some extend this is normalisation as the post-pandemic boom abates, but it is also driven by uncertainty," he said.
• While starting pay for new permanent staff rose sharply by pre-pandemic standards, the rate of wage growth was the lowest since April 2021, REC said. Claire Warnes, partner of skills and productivity at KPMG UK, said competition for skilled workers and cost of living pressures were keeping starting salaries high.

(Source: Reuters)

• China's promised "basket of measures" to defuse local government debt risks is likely to include special bond issuance, debt swaps, loan rollovers, and something Beijing loathes: dipping into the central budget.
• Local governments are fundamental to China's economy with Beijing tasking provincial and city officials with meeting ambitious growth targets. With that being said, after years of over-investment in infrastructure, plummeting returns from land sales and soaring COVID costs, economists say debt-laden municipalities now represent a major risk to China's economy.
• Chinese leaders last month pledged, without detailing, to help ease their debts, signalling worries over a potential chain of municipal debt defaults destabilising the financial sector. Economists took that message as being more constructive than in April when Communist Party leaders demanded "strict control" of local debts. The implication, they say, is that Beijing has realised it needs to urgently throw cash at the problem.
• That could represent a major breakthrough in finding a way out of China's municipal debt crisis, with Beijing having for years demanded that local administrations sort themselves out. "The local debt problem is complex so you cannot simply say you don’t want to take responsibility," said Guo Tianyong, professor at the Central University of Finance and Economics in Beijing, explaining the politburo's directions.
• The extent of any central government involvement, and any conditions attached to it, are still subject to debate, two policy advisers told Reuters. Whether the package of measures will be a short-term or multi-year plan also remains unknown.

(Source: Reuters)

• Brazil has resisted gathering momentum in the BRICS group of major emerging economies to add more member countries, but the debate over admission criteria seems inevitable at this month's summit, three Brazilian government officials told Reuters.
• The group including Russia, India, China and South Africa, has been hailed by some as a counterweight to traditional diplomatic forums like the G7. BRICS makes decisions by consensus, so Brazil's assent will be key to any expansion.
• The BRICS group accounts for more than 40% of the world population and about 26% of the global economy and offers an alternative forum for countries outside diplomatic channels seen as dominated by traditional Western powers. Its influence and economic heft have more nations eager to join.
• China, looking to increase its political clout at a time of trade tensions with the United States, has long pushed to expand BRICS membership. Russia, isolated diplomatically over its war in Ukraine, is also embracing the chance to court allies.
• South Africa, which chairs the group this year, held a "Friends of BRICS" meeting in June with several countries eager to join. Even India, which was wary of rapid expansion, may have come around to the idea in principle, sources said.
• However, Brazil is concerned the group will lose its stature if other nations are let in. Some 30 countries have said they are interested and 22 of them have formally applied, as Algeria did last month.
• "An expansion could transform the bloc into something else," said a Brazilian official, who asked not to be named. "Brazil's position has been concerned with the cohesion of the group and preservation of our space in a group of important countries."
• Diplomats were told to go back to the drawing board and design a process for admitting new members acceptable to the entire group. Without an agreement, the matter is not expected to be settled at this month's summit.

(Source: Reuters)

• Colombia's central bank unanimously held the benchmark interest rate at 13.25% for the second time in a row on Monday, July 31, amid slowing inflation which has removed pressure for further hikes but remains too high for borrowing cost cuts.
• Inflation remains at high levels compared to the bank's long-term 3% target, the board said in a statement, and the economic slowdown in the second quarter may have been larger than predicted.
• "We expect to continue to monitor the behaviour of inflation, given we still have an increase in fuel prices that is still having an effect, and we hope there won't be any reversal in the inflation rate, so we can consolidate the downward tendency," said Finance Minister Ricardo Bonilla, who represents the government on the board.
• All 26 analysts consulted in a recent Reuters poll expected the bank to hold the rate after 12-month inflation through June slowed to 12.13%, the lowest level since last September.
• The bank's technical team may update its growth and inflation predictions for this year and 2024 in its quarterly monetary policy report due by the end of this week. Most analysts expect the board will start cutting the rate in September or October to avoid a greater impact on growth. The bank's technical team currently predicts growth could slow to 1% this year, far below the 7.3% expansion in 2022.
• The board hiked its benchmark rate by 1,150 basis points between September 2021 and this April, mirroring positions taken by monetary policy authorities around the world, to try to contain inflationary pressures. The board is expected to reduce the rate to 11.75% by the end of this year, before lowering it further to 7.25% at the end of 2024, those polled by Reuters have said.

(Source: Reuters)