Economy — Page 58

Business inflation expectations

July 23, 2013 by IC Insider.com

A recent survey was conducted in May 2013 with 300 respondents showed that business sector expected inflation for the calendar year to be 10.3 percent, which is lower than the 10.6 percent they expected when the April 2013 survey was done. The expected inflation for calendar year 2013 was higher than the outturn of 8.0 per cent for 2012 and the annual point to-point inflation of 9.1 per cent as at May 2013.

In the latest survey respondents’ expectation of inflation 12 months ahead was down to 11.2 percent in the May 2013 survey from the 11.8 percent indicated in the April 2013 survey. Bank of Jamaica is saying that the expectation for lower inflation could have been indicative of the abatement in uncertainty surrounding the Government’s economic programme.

The central bank states that the Statistical Institute of Jamaica (STATIN) undertakes surveys of businesses on behalf of the Bank of Jamaica to ascertain the expectations about variables which are likely to have an impact on inflation in the near-term. In this regard, the survey captures the perception of Chief Executive Officers, Managing Directors and Financial Controllers about the future movement of prices, current and future business conditions and the expected rate of increase in wages and salaries. These responses assist the Central Bank in charting future policy decisions.

Filed Under: Economy Tagged With: BOJ, Economy, GOJ

Business sector expects rates to rise

July 23, 2013 by IC Insider.com

A survey conducted in May 2013 on behalf of Bank of Jamaica, soliciting the views of executives of the private sector showed that the business sector expects the 180-day T-bill rates to increase to 6.5 percent in the three months hence, up from the 5.4 per cent expressed in the previous survey. In the May 2013 auction, the actual interest rate for the 180-day Treasury bills increased to 6.44 per cent from 6.39 per cent in the April 2013 auction.

The majority of respondents expected that the Bank’s Open Market Operation (OMO) rate would remain the same over the next three months. This was similar to the views conveyed in the April and March 2013 surveys. The percentage of respondents that were of the view that the OMO rate would remain the same increased to 51.3 per cent from 43.0 per cent in the previous survey. The results from the overall survey about expectations for the OMO rate were largely corroborated by the views of respondents in the financial sector

The Statistical Institute of Jamaica (STATIN) undertakes surveys of businesses on behalf of the Bank of Jamaica to ascertain the expectations about variables which are likely to have an impact on inflation in the near-term. In this regard, the survey captures the perception of Chief Executive Officers, Managing Directors and Financial Controllers about the future movement of prices, current and future business conditions and the expected rate of increase in wages and salaries. These responses assist the Central Bank in charting future policy decisions.

Filed Under: Economy Tagged With: BOJ, GOJ, TBills

Improved business outlook

July 22, 2013 by IC Insider.com

The perception of present and future business conditions in the most recent survey amongst Chief Executive Officers, Managing Directors and Financial Controllers found that the business community perception has improved relative to the previous survey in April. The survey was carried out by Statin on behalf of Bank of Jamaica in May and data was collected from 300 respondents.

Perceptions about future business conditions also improved for the second consecutive survey. The improvement in these perceptions was in contrast to the declining trend observed in both indicators since the December 2011 survey. “Of note, the improvement may be attributed to continued reduction in uncertainty about the Government’s economic programme” the central bank commented.

Operating Expenses | Respondents continued to indicate that they expect the largest increase in production costs in the next 12 months to reflect the higher cost for utilities. Other costs that were expected to contribute significantly to inflation in the next 12 months included stock replacement and fuel & transport costs. The cost of raw materials and wages & salaries were the input costs least expected to increase over the next 12 months.

The survey also covered a number of other areas in addition to business conditions.

Filed Under: Economy, Initial Public Offers, Stock Market Tagged With: BOJ, Economy

April remittances back on track

July 21, 2013 by IC Insider.com

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Gross remittance inflows for April 2013 were US$180.1 million, the same as a year earlier and reflects an improvement on a year over year comparison with March of this year when inflows were off from March 2012 by $9.5 million. Inflows for the review period reflected a US$4.6 million increase in inflows through Other Remittances which was offset by reduced flows of a similar value through Remittance Companies.

Total remittance outflows for the April this year decreased by US$1.2 million to US$20.1 million. The combined impact of inflows and outflows resulted in net remittance flows increasing for April.

For January to April, total remittance inflows amounted to US$672.7 million, a decrease of US$12.3 million or 1.8 percent. The decrease amounts to US$18.8 million or 3.2 per cent deterioration in inflows through Remittance Companies. The decrease in inflows was partly offset by a US$6.6 million or 6.5 per cent increase in flows via Other Remittances.

Net remittances for 2013 to April were US$591.5 million, a decline of US$3.9 million or 0.7 per cent relative to 2012.

See our previous report on Remittance inflows dip, published 26th June 2013.

Filed Under: Economy Tagged With: FX Market, Remittances

Inflation slows to a crawl

July 19, 2013 by IC Insider.com

Inflation levels declined sharply from what was reported in May due mainly to a decline of 2.5 per cent in the index for the division ‘Housing, Water, ‘Electricity, Gas and Other fuels’. This was mostly due to a reduction in prices for ‘Electricity, Gas and Other Fuels’ and for ‘Water Supply and Miscellaneous Services related to Dwelling’.

Statin, the government’s body for collection and collating the data, reported that the All Jamaica ‘All Divisions’ Consumer Price Index for June 2013 recorded a mere 0.2 per cent rate of inflation, 0.3 percentage points below the 0.5 per cent rate recorded for May 2013. ‘Food and Non-Alcoholic Beverages’, the heaviest weighted division in the computation of the Index, recorded a 0.7 per cent rate of increase, resulting mainly from increased prices for ‘Fruits’ which was moderated by the declines mentioned above.

The other divisions that recorded increases were ‘Alcoholic Beverages and Tobacco’ 0.7 per cent, ‘Clothing and Footwear’ 0.4 per cent, ‘Furnishings Household Equipment and Routine Household Maintenance’ 0.5 per cent, ‘Health’ 2.0 per cent, ‘Transport’ 0.2 per cent ‘Recreation and Culture’ 0.4 per cent, ‘Restaurants and Accommodation Services’ 0.3 per cent, and ‘Miscellaneous Goods and Services’ 0.7 per cent. There was no movement recorded for ‘Education and ‘Communication’.

The mean All Jamaica CPI for the second quarter in 2013 moved upward by 2.0 per cent in comparison to the 2.5 per cent for the first quarter. The calendar year–to-date inflation rate was 3.9 percent.

The Greater Kingston Metropolitan Area (GKMA) and Rural areas recorded increases of 0.3 per cent and 0.1 per cent respectively, while the inflation rate for Other Urban Centres (OUC) was relatively unchanged.

Filed Under: Economy Tagged With: Economy, GOJ

Mining & Agriculture dent GDP badly

July 16, 2013 by IC Insider.com

Data from the Statistical Institute of Jamaica (Statin) is confirming what Jamaicans already know — the economy suffered a decline in the first quarter of 2013. According to the government body charged with the collection and compilation of data, the economy declined by 1.3 percent in the first quarter of 2013 compared to the similar quarter of 2012. The sectors that made a big dent to the economic performance were Agriculture, Forestry & Fishing industry which declined by 11.4 per cent, Mining & Quarrying industry which fell by 9.1 per cent. These of course were not the only sectors to suffer reduced output.

The report indicated decreased output in both the Goods Producing and Services industries which fell by 4.5 per cent and 0.1 per cent respectively. Continued macroeconomic challenges in the economic environment as well as the lingering effects of Hurricane Sandy, which affected the island in October 2012, were the factors posted by Statin for the poor performance of the sectors and the negative economic performance in the first quarter.

The Manufacturing sector declined by 1.6 per cent but there was improved performance in the Construction industry which grew by 0.7 per cent. There was mixed performance within the Services industries. Increased output was recorded by Transport, Storage and Communication (0.6 per cent), Finance and Insurance Services (0.2 per cent), Real Estate, Renting & Business Activities (0.4 per cent) and Other Services (0.1 per cent). Industries that experienced lower levels of output were Electricity & Water Supply (-3.0 per cent), Hotels and Restaurants (-2.3 per cent) and Producers of Government Services (-0.1 per cent). The Wholesale & Retail Trade, Repairs, Installation of Machinery & Equipment remained unchanged.

When compared with the fourth quarter of 2012, the real value added declined 0.5 per cent. Both the Goods Producing and Services industries recorded lower levels of output. The Goods Producing industries declined by 1.4 per cent while the Services industries declined by 0.2 per cent.

Filed Under: Economy Tagged With: Economy, GOJ

BOJ raises rates to attract money

July 10, 2013 by IC Insider.com

Bank of Jamaica, the country’s central bank, pushed up rates on its open market operations when it announced the latest series of CDs to mop up liquidity of Jamaican dollars.

At the last Treasury bill auction, investors sent a clear signal that they wanted higher rates to take on the risk of tying up their funds for more than three months. Will this move result in higher rates in the financial markets for the rest of the year? Some persons are of that view in light of the tight situation with the foreign exchange market. There is also the view that with the government pulling more revenues than originally projected and generating a smaller deficit than planned so far, the rest of the year could prove tight economically thus reducing demand in the country and by extension foreign currency.

According to a release from the bank, “To augment its liquidity management operations, the Bank of Jamaica will be offering two variable rate instruments commencing Tuesday, 09 July 2013 to Friday, 12 July 2013.”

The previous issue was priced at 6.99 percent for the 365 days instrument, 36 basis points lower than the current one.

The instruments on offer are:

A 365-day Certificate of Deposit, for an unlimited amount. The instrument re-prices semi-annually at 0.23 percentage point above the six month GOJ Treasury Bill rate existing at the start of each re-pricing period. The initial coupon for the first six months is 7.35 per cent per annum.
An 18-month Certificate of Deposit, for an unlimited amount. The instrument re-prices semi-annually at 0.25 percentage point above the six month GOJ Treasury Bill rate existing at the start of each re-pricing period.

The initial coupon for the first six months is 7.37 per cent per annum. These offers are available directly to Primary Dealers and commercial banks. Other investors may access these instruments through a Primary Dealer. The term sheets for these Certificates of Deposit will be circulated via electronic mail to all Primary Dealers and commercial banks and will also be available on the Bank’s website at www.boj.org.jm

The bank says that it will continue to offer its regular 30-day Certificate of Deposit at the current interest rate of 5.75 per cent per annum.

The previous issues which were available between Monday, 01 July 2013 to Thursday, 04 July 2013 carried the following terms:

Variable Rate Certificate of Deposit 2013(D) which was originally issued on 12 June 2013 and is now being re-opened for a limited nominal amount of $2.0 billion. The tenor for the re-opened instrument is 164-days. This instrument maintains the original issue terms, viz, the initial coupon is 6.77 per cent per annum up to the first interest payment date on 12 September 2013 and re-prices quarterly at 0.15 percentage point above the three month GOJ Treasury Bill rate for the next interest payment date up to the maturity date on 12 December 2013.
A 365-day Certificate of Deposit, for an unlimited amount. The instrument re-prices quarterly at 0.23 percentage point above the three month GOJ Treasury Bill rate existing at the start of each re-pricing period. The initial coupon for the first three months is 6.99 per cent per annum.

Filed Under: Economy Tagged With: BOJ, FX Market, GOJ, TBills

Ghana Stock Exchange best African performer

July 8, 2013 by IC Insider.com

Report from www.myjoyonline.com | The Ghana Stock Exchange is the best performing market in Africa in terms of returns to investors for the first quarter of this year. That’s the conclusion of Databank’s quarterly market research, which ranks stock markets in Africa based on dollar returns to investors.
With a little over 45 percent return, the report ranked Ghana’s stock market as the best performer beating other markets like South Africa, Egypt, and Nigeria.
In cedi terms, the Ghana Stock Exchange has returned nearly 53 percent to investors. This is far better than the 23 percent you would have earned if you had invested in Treasury bills or about the average 15 percent annum you would have realized on your bank deposit.
Vice President of Databank Financial Services, Reverend Daniel Ogbarmey Tetteh explains to JOY-BUSINESS what must be accounting for this. “Just before the end of last year, we saw the market picking up and showing signs of beginning to have a good rally. So we expected and projected that we’re going to have a good rally this year driven especially by the financial stocks as evident in the valuation,” he said.
But what will this mean to retail investors and can the market sustain the performance?
“If the rally was not supported by the fundamentals, that’s when it would have been a source of worry because of the possible correction in the near future. If you monitor the full year 2012 results and even the Q1 results that have been released, it gives some support to the price rally seen on our markets. So if anything at all, the upward trend is likely to be sustained – maybe not at the same pace, but we still expect the market to inch up. For me, I would like to caution retail investors to know that investing in shares is a long-term play and so shouldn’t just be excited about the short term benefits but also get interested in the long term benefits.” he said.

Story by Ghana / Joy Business / Emmanuel Agyei / George Wiafe

Filed Under: Economy, Global Market, Stock Market Tagged With: Economy

NIR surpasses $1 billion

July 6, 2013 by IC Insider.com

Jamaica’s Net International Reserves climbed back above the billion dollar mark at the end of June as it reached US$1.003 billon. At the end of May the net reserves was US$988 million.

Gross reserves amounted to US$1.88 billion at the end of June an increase of US$14.36 million. The NIR at the end of June represents 17.63 weeks of goods imports and 13.22 weeks of imported goods and services. The increase seems to have emanated from efforts of the Central Bank to get foreign currency released from players who took a long position in foreign currency for investment purposes.

The net reserves reflect $855.40 million that is due to the International Monetary Fund (IMF) that is being held on a short term nature and is therefore not included as a part of the Net International Reserves. Most of this amount would have been received when the first debt exchange took place in 2010 to provide support for the financial sector in case they ran in to liquidity problems. None of this amount has been used to date.

Filed Under: Economy Tagged With: Economy, FX Market, NIR

US economy on the bounce

July 5, 2013 by IC Insider.com

Employment in the USA improved by about 195,000 jobs in June according to the Labour department, above expectations for 165,000. There were also positive revisions to previous months, though the unemployment rate ticked up to 7.6 percent from 7.5 percent.

The announcement this morning sent stock prices higher in the USA and resulted in a surge of the US dollar against the other major currencies as the data indicates continued recovery for the largest economy in the world and is bringing the time frame for the Federal Reserve to start cutting back on easy money much closer to hand.

The news is good for Caribbean countries that depend a great deal on the health of the US economy. For Jamaica it will be increasing earnings for the tourist sector going forward as more Americans feel financially empowered.

Immediately, the rate of exchange for the Pound and Canadian dollars should reflect the increase US dollar strength when the Forex rates are release by Bank of Jamaica later today.