Global Economy

U.S.A: New unemployment claims in the U.S. fell to 213,000 for the week ending November 16, marking a seven-month low and beating forecasts of 220,000, signaling a potential rebound in job growth after disruptions from hurricanes and strikes in October. However, unemployment rolls climbed to their highest since late 2021, as laid-off workers face challenges finding new jobs, posing an upside risk to the unemployment rate. Unadjusted claims dropped by 17,750, with declines in states like California, New Jersey, and Texas, where layoffs in education and healthcare had driven previous spikes. Despite labor market slack, layoffs remain historically low, keeping the door open for another Federal Reserve rate cut next month as inflation stays above the 2% target and hiring remains sluggish.

 

Sub-Saharan African Economies

 

 

Euro Area: Eurozone inflation climbed to 2% in October 2024, up from 1.7% in September but well below the 2.9% recorded a year earlier, while inflation across the EU rose to 2.3%, compared to 2.1% in September and 3.6% a year ago. Inflation rates varied widely, with Slovenia at 0.0%, and Lithuania and Ireland at 0.1%, marking the lowest increases, while Romania led with 5.0%, followed by Belgium and Estonia at 4.5%. Among member states, inflation fell in two, stayed flat in six, and rose in nineteen compared to September. Key drivers of euro area inflation included services, contributing +1.77 percentage points (pp), followed by food, alcohol, and tobacco (+0.56 pp), and non-energy industrial goods (+0.13 pp). Meanwhile, energy provided relief with a negative contribution of -0.45 pp, signaling easing pressures in the sector. These figures highlight the diverse inflationary landscape across the region and its underlying drivers.

Egypt: The Central Bank of Egypt kept its interest rate unchanged at 27.25% in November 2024 for the eighth consecutive month, reflecting domestic and global conditions. Annual headline inflation stabilized at 26.5% in October, with core inflation at 24.4% and food inflation at a two-year low of 27.3%. GDP growth improved in Q3 2024, exceeding the 2.4% growth in Q2, with further gains expected in Q4 despite output remaining below potential.

Morocco: Morocco’s annual inflation rate eased to 0.7% in October 2024, the lowest in five months, down from 0.8% in September. Food and non-alcoholic beverage prices moderated (0.3% vs 0.5%), while transport costs declined more slowly (-0.2% vs -2.4%). Housing and utilities (3.6%) and clothing and footwear (2%) prices remained steady, with a slight uptick in restaurants and hotels (3.6% vs 3.5%).

Rwanda: The National Bank of Rwanda maintained its benchmark rate at 6.5% in November 2024, following earlier cuts in May and August. The decision reflects agricultural uncertainties and aims to keep inflation within the 3%-8% target. Inflation remained subdued at 0.5% in October.

Domestic Economy

Major updates during the week:

  • The Federation Accounts Allocation Committee (FAAC) disbursed N1.411trn to the three tiers of government and other stakeholders for October 2024, representing an 8.46% increase from September due to gains from exchange differences and higher taxes.
  • The Senate approved a US$2.2bn loan request to support Nigeria’s debt management strategy, aiming to reduce borrowing costs and bolster external reserves.
  • The House of Representatives passed a motion to recapitalize DisCos with a minimum capital requirement of N500bn, aiming to improve their financial stability and service delivery.

 

Nigerian equity market: Equity market climbs for second week amid strong buying interest

The Nigerian stock market recorded its second consecutive weekly gain, driven by strong buying in stocks like WAPCO (+28.57%), DANGSUGAR (+16.67%), and MTNN (+1.18%). Investors gained N76.91 billion as market capitalization increased to N59.29 trillion from N59.22 trillion the prior week. This positive trend was bolstered by gains in LAFARGE (+28.57%), UNILEVER (+20.82%), CADBURY (+22.41%), and EUNISELL (+60.72%). Overall, four of the five top sectoral indexes saw gains, with only the Banking sector index declining by 2.57%.

Nigerian fixed-income market: Bonds and bills hit record high at primary market auction.

This week, investors maintained a strong appetite for real returns amid rising inflation. At the bond auction, the DMO sold N346bn (vs N120bn offered), with the 2031 yield climbing to 22% (from 21.74%). Similarly, the treasury bills auction saw an extra N82bn issued, with the 1-year rate rising to 23.50% (from 23.00%). Despite this, buying interest dominated the secondary market, leading to lower yields on treasury bills (-12bps) and bonds (-3bps) WoW. Conversely, Eurobonds closed negative (+4bps WoW) due to selling pressure on mid- and long-term maturities. We expect bearish sentiment next week as the market anticipates another rate hike from the central bank.