Global Economy

U.S.A: The U.S. labor market capped off the Biden administration with a strong December jobs report, adding 256,000 new positions, up from 227,000 in November, and surpassing expectations. President Joe Biden celebrated the milestone, highlighting his administration’s creation of 16.6 million jobs and a record-low average unemployment rate as he exits office. Additional data reinforced the labor market’s strength, with the November Jobs Openings and Labor Turnover Survey (JOLTS) reporting over 8 million job openings and a 33% drop in layoffs in December. Despite earlier fears of high interest rates affecting unemployment, the rate remained steady at 4.1%. However, the Federal Reserve’s inflation goal of 2% remains unmet, with inflation hovering at 2.5%, and the robust job report dampened expectations for further rate cuts this month.

 

Sub-Saharan African Economies

Eurozone: Eurozone inflation climbed to 2.4% in December, marking its third consecutive monthly rise and diminishing hopes for a substantial rate cut by the European Central Bank (ECB) later this month. The increase, in line with market expectations and up from November’s 2.2%, keeps inflation above the ECB’s 2% target. This has reduced the likelihood of a jumbo 50 basis-point rate cut at the ECB’s January 30 meeting, with analysts now expecting a more modest 25 basis-point cut to the current 3% deposit rate. The ECB has already lowered rates four times since June to address sluggish growth and subdued inflation, but hopes for a larger cut are fading. Despite this uptick, the ECB forecasts inflation to fall toward its 2% target this year, though some dovish policymakers worry price pressures could undershoot expectations.

Egypt: Egypt’s annual urban inflation rate eased to 24.1% in December 2024, down from 25.5% in November, marking the lowest rate since December 2022. This decline, slightly below expectations of 24.2%, was driven by reduced price increases in food and non-alcoholic beverages, transport, and other sectors. However, inflation remains well above the central bank’s 5-9% target. Monthly inflation rose by 0.2%, the smallest increase in seven months..

Ghana: Ghana’s annual consumer inflation rose to 23.8% in December 2024, up from 23% in November, marking the highest rate since April 2024. The increase was mainly driven by higher food and non-alcoholic beverage prices, while non-food price growth slowed.

Kenya: Kenya’s economy grew by 4% in Q3 2024, the slowest rate since Q1 2021, reflecting a general slowdown across various sectors. Agriculture increased by 4.2%, driven by sugarcane and milk production, despite a 12.2% decline in tea output. Manufacturing, utilities, ICT, and financial services experienced slower growth, while mining and construction contracted by 11.1% and 2%, respectively.

 

Domestic Economy

Major updates during the week:

  • The NBS announced updates to Nigeria’s GDP and CPI rebasing, adopting 2019 and 2023 as new base years, digitalized data collection, and an expanded CPI basket, with rebased inflation rates due late January.
  • The CBN announced a halt on export proceeds extension approvals, introduced new diaspora accounts (NRNOA & NRNIA), and mandated timely export earnings repatriation to improve FX liquidity.
  • According to the NCC, Nigeria’s broadband connections rose 2% MoM to 91.6M in October 2024, with broadband penetration rate at 42.2%, still below the FG’s 70% target, hindered by infrastructure gaps, low investment, and security issues.

Nigerian equity market: NGX ASI sees bullish performance amid mixed sector performance 

The Nigerian stock market closed three of five trading sessions in positive territory this week, extending gains from the prior week as the year-to-date (YTD) return climbed to +2.45%. The benchmark All-Share Index (ASI) rose by 1.80%, closing at 105,451.06 points, up from 103,586.33 points the previous week. Investors saw significant value appreciation, with market capitalization increasing by ₦1.25 trillion to close at ₦63.17 trillion. The week’s performance was fueled by strong buying interest in stocks like MTNN (+21.00%), TRANSCORP (+18.39%), and TRANSCOHOT (+9.78%On a sectoral basis, the Banking index emerged as the sole gainer, posting a 1.94% week-on-week (WoW) increase, while the Insurance sector experienced a sharp 6.91% decline due to profit-taking after several weeks of leading the gainers.

Nigerian fixed-income market: Strong demand pushed yields down in the NTB market.

This week, at the first treasury bill auction of the year, the DMO demonstrated its commitment to reducing borrowing costs by issuing the full ₦515 billion on offer, despite receiving bids worth ₦1.5 trillion. This caused the 1-year maturity rate to drop by 28bps. Unsuccessful bidders in the primary market redirected their demand to the secondary market, leading to a 0.24% week-on-week decline in the average yield. The bonds market saw a bearish sentiment, with the average yield rising by 8bps to 19.86%. However, there was slight buying interest at the short end, particularly in the MAR-2026 bond, where the yield dropped 1.61% to close at 18.02%. Similarly, the Eurobond market traded bearish, with the average yield increasing by 4bps to 9.52%.