Soft remittance flows to end at $3.4B in 2023

Remittance inflows into Jamaica fell 1.9 percent in September to U.S$284.4 million and 1.2 percent for the year to date to just under $2.53 billion, this marks the 6th month of decline in remittances for the year to date, data from jamaica’s central bank shows.
With three months to go before the end of 2023, the market seems on track to be close to this US$3.44 billion of total inflows in 2022, with the absolute shortfall in remittances to date of just US$31 million adrift of the 2022 intake to September. The 1.9 percent fall in September is far less than the 5.9 percent decline that occurred in August and a 5.8 percent fall in April.

Cooling inflation demands lower interest rates

Inflation cooled considerably over the past year in Jamaica, to 5.1 percent to October 2023, data just released by the Statistical Institute of Jamaica (STATIN) shows. The rate is down from 5.9 percent for the period this year to September 2023, and down from 9.9 percent for the October 2022 period.
Statin also stated that inflation for October came in at points 0.8 percent, sharply down from the same period last year at 1.5 percent. October’s inflation is worse than the 0.5 percent that occurred in September this year. But spike in oil prices would have played a big role in October inflation. The fall in oil price to the low $70 levels currently, is signalling that inflation in November is likely going to be moderate with the year to date inflation then heading for the low 4 percent range.
According to the report, inflation in October was driven primarily by the upward movement in the division of ‘Housing, Water, Electricity, Gas and Other Fuels’. The increase in the division’s index was mainly attributed to higher rates for electricity, water and sewage. In addition, ‘Food and Non-Alcoholic Beverages’ also contributed to the increase.
Point to point inflation is now well within the Bank of Jamaica’s mandated target range of 4-6 percent, but the fiscal year numbers which are the basis for their target could be much higher than the figure above. Regardless the central bank runs the risk of driving the economy into recession if they are not careful and move to ease interest rates fast.
Recent data from a large number of listed companies show sluggish revenues growth and lower profit for the September quarter compared with 2022 as well as the first half of 2023, added to this, tourist arrivals slowed considerably in recent months compared to the earlier part of the year and that industry has been the major driver of economic activity this year and added to that the construction sector has been in decline and could worsen.

Jamaica’s tourism rebound slows

Tourist arrivals to Jamaica continue to grow, but at a much reduced pace than earlier in the year, data for the all important Sangster International Airport shows. Passenger traffic passing through the airport in October grew 10.3 percent, to 350,000, up from 317,000 last year, and is well below the year to date of an increase of nearly 22 percent to 4.3 million passengers versus 3.54 million in the previous year.

Airplanes lined up at Sangster’s International Airport in early 2023.

In the case of Kingston’s, Norman Manley International Airport saw 8.9 percent fewer passengers passing to the island’s second largest airport for a second month, declining to 129,000 passengers passing through compared with 141,200 in 2022, but for the year to date, the airport saw 15.6 percent more passengers passing through than the year before when 1.2 million passed through compared to 1.47 million this year to date.
Data was taken from a  release passenger traffic for the two International Airports operated by Grupo Aeroportuario Del Pacifico.
According to Jamaica Tourist Board data, stopover arrivals to Jamaica for the first six months of this year, the latest period they have so far reported on, were up 26.8 percent over that of 2022 and 6.7 percent above 2019 figures, while for the quarterly to June, arrivals were up 13.6 percent over 2022 and just 9.9 percent over that of 2019.

Worst fall for remittances

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Remittance inflows to Jamaica in August slipped by 5.9 percent or US$18 million, the worst monthly decline for 2023, with total inflows of US$289, down from US$307 in August 2022, data out of the Bank of Jamaica show. The decline beats the 5.8 percent decline in April, with a slippage then of US$17 million.
So far, January, March and May are the only months with positive inflows compared with 2022.
In a year of primarily monthly declines, inflows are down by 1.1 percent or US$26 million to US$2.24 billion to August from US$2.267 million for the first eight months last year and now seem likely to come in just below the US$3.44 billion total inflows for 2022.

Unemployment steadies for Jamaica

Jamaica’s unemployment rate was held at 4.5 percent In July 2023, the same as April this year but the number of persons employed rose marginally to 1.3151 million persons up from 1.3126 million in April this year, data from the Statistical Institute of Jamaica (Statin) reports show.
Some 47,000 more persons were employed in July 2023 compared to July 2022 and reflects an 8.5 percent increase over the 43,300 newly employed in April this year.
There was an increase, mostly males, in persons employed in the occupation group ‘Elementary Occupations’, while more females were employed as ‘Service Workers, Shop and Market Sales Workers’ and ‘Clerks’. The industry, with the largest increase in employment was in Real Estate and Other Business Services and ‘Construction.
In July 2023, there were 1,377,300 persons in the Labour Force, an increase of 19,600 or 1.4 percent compared to July 2022. The male labour force increased by 8,400 or 1.2 percent to 734,400 and the female by 11,200 (1.8 percent) to 624,900.
Statin reports that the participation rate was 65.6 per cent, an increase of 0.9 percentage points, which compares favourably worldwide. The participation rate for males is 71.2 percent and females 60.1 percent, for an increase by 0.7 and 1.0 percentage points, respectively.

Jamaica’s labour market has tightened.

For comparison, Investopedia reports that “the World Bank’s most recent data from 2022, shows that the U.S. participation rate falls in the middle of the pack at 62 percent, a few points ahead of the world rate of 60 percent.”
In July 2023, the number of unemployed persons was 62,200, a decrease of 27,500 or a solid 30.7 percent compared to July 2022 and marginally up from 61,300 in April. The number of unemployed males was 24,600, a decrease of 13,000 or 34.6 percent. The number of unemployed females was 37,600, a decrease of 14,500 or 27.8 percent. The number of unemployed youths in the age group of 14 -24 years decreased by 9,000 or26.0 percent to 25,600.

Inflation plunges to 5.9% in past year

Inflation over the past twelve months plunged to 5.9 percent data from the Statistical Institute of Jamaica states. The drop was occasioned by a 0.5 percent rise in inflation for September down sharply from 1.4 percent in September last year. The fall follows a jump in August to 6.8 percent from 6.6 percent to July.
If the rate for September holds or falls in October the twelve month rate will fall below 5 percent.
According to Statin, the main contributor to September’s movement was an 11.8 per cent rise in the index of the ‘Education’ division, due to higher tuition fees for private schools at the primary level. The inflation rate was also impacted by the 0.7 per cent ‘Transport’ division mainly as a result of higher petrol prices. The index for the heavily weighted ‘Food and Non-Alcoholic Beverages’ division went up by 0.1 percent. However, there was a 1.9 per cent decline in the index ‘Vegetables, tubers, plantains, cooking bananas and pulses’ class and this tempered the overall increase of the division.

Remittances tracking 2022 inflows

Remittance inflows to Jamaica for the first half of 2023 are marginally behind intakes for 2022 with $1.64 billion being taken in, 0.3 percent less than for the same period in 2022, with June slipping 0.7 percent to $286 million below the $288 million collected for June last year.
The data for the half year suggests that the total of US$3.44 billion collected in 2022 is likely to be within reach this year if the current trend continues. In 2019 gross remittance inflows were $2.4 billion, which is a billion dollars less than was collected in 2022.
According to the Bank of Jamaica, the entity that compiles the data, remittances from the USA account for 69.8 percent of total flows, down from 70.7 percent in June 2022. Other source countries with a notable share are Canada at 10.5 percent, followed by the UK and the Cayman Islands at 10.0 percent and 5.8 percent, respectively.

Jamaica’ NIR jumps to record high

Jamaica’s net international reserves continue to scale new heights closing at the end of August 2023 jumped US$299 million to a record month end balance of US$4.43 billion, up from US$4.13 billion at the end of July.
The main factor driving the reserve is a reduction of amounts due to the International Monetary Fund (IMF) of $362 million moving the figure from US$508 million in short term debt down to US$146 million at the end of August.
At the end of December last year, the reserves stood at US$3.978 billion and have climbed US$456 million for the year to date.

Tourism recovery continues for Jamaica

touristThe recovery of tourist traffic to Jamaica from the closure of the industry in 2020, continues robustly with early data showing Montego Bay enjoying a 15.5 percent bounce in passenger movements through the Sangster International Airport, with 469,700 passenger passing through that airport in August this year, compared with 405,800 in 2022 with a 24.4 percent jump for the year to date to 3.64 million, up from 2,925 in 2022 for the same period.
Traffic in August for Kingston was up just 6 percent to 195,600 compared with 184,600 in 2022 and is up 21.7 percent to 1.207 million from 991,700 in 2022. Data was taken from the release of traffic for the various airports operated by Grupo Aeroportuario Del Pacifico, who are operators of both Jamaican Airports.
Traffic to Jamaica is up 15 percent over 2019, the last full year with no disruption with some 406,993 passengers passing through the Sangster Airport while Kingston is 5.4 down on the 205,860 passengers in 2019. Sangster’s, with 3.41 million passing through the airport just under 7 percent ahead of 2019 and the 1.33 million traversing the Kingston down 9 percent below the 2019 numbers.
Passenger movements represent incoming and outgoing passengers, roughly half represent incoming, with those passing through Sangster’s representing the majority of visitors to the island as such it provides a good proxy for stopover visitor arrivals to the country.

A 600% plunge in Unemployment in Jamaica

When the Jamaica unemployed fell to the lowest level on record to 4.5 percent in April this year, it was falling precipitously by more than six times from the levels that were at unhealthy and chronically high of 24 to just under 28 percent between 1977 and 1989.  

Jamaica’s record low unemployment at 4.5% in April 2023.

The April 2023 outcome is down from 6 percent in April last year and from 6.6 percent in July 2022, while the number of persons employed is at its highest level ever, with the total number of employed persons at 1.313 million in April this year. The highest level of employment before was 1.27 million in January 2020. Knowledgeable persons have expressed their views on the numbers, with one suggesting that Jamaica has always had a low level of unemployment. That is entirely at variance with the facts; see chart.
The country has only experienced rates below 15 percent for a few years, primarily after 2007.
There has also been some focus on the number of hours used to determine whether persons are included in the employed pool. What has not been acknowledged by critics of the low unemployment level is the many businesses finding it more difficult to recruit workers to employ, as well as the need to increase wages to retain those they have. Finding workers going forward is going to be a real challenge and one that will cause companies to look carefully at their operations to see where they can employ cost savings methods to deliver goods and services with minimal dislocations. If the economy continues to expand, it will result in workers coming in from overseas.
When Jamaicans start to pump gas for their vehicles, it will dawn on us that things have changed and that development is only a few years away.
Jamaica’s employment rate has been pushed by the considerable focus on tourism expansion and the advent and rapid expansion in the BPO sector that now employs around 5 percent of the workforce, with the numbers employed said to be over 60,000 and addition a sharp increase in construction activity for residential and commercial demand lifted employment in that area.
Data compiled by from the Bank of Jamaica, the World Bank and Statin show that unemployment averaged 25.8 percent between 1977-89. The rate fell in 1990 to 19.1 percent and 15.7 percent in 1992 and remained around 15 percent until 2006, then fell to 11.5 percent in 2007 and 11.3 percent in 2008 and 9.9 percent in 2009 before reversing back up to mid-teens up to 2015 and had slowly drifted down since with the exception of 2022 when it climbed to 10.7 following the economic fallout from the Covid19 pandemic.