Global Economy

U.S.A: Initial jobless claims in the US dropped by 1,000 to 219,000 during the second week of December, defying market expectations of a rise to 224,000. This decline marks the lowest level since the near seven-month low of 213,000 recorded in mid-November, reinforcing signs of a persistently tight labor market as the year draws to a close. The figures support the Federal Reserve’s recent stance that inflation poses a greater risk to economic stability than labor market softening, underpinning the justification for maintaining restrictive monetary policy. In contrast, continuing unemployment claims climbed to 1,910,000 in the first week of December, the highest in three years. This increase highlights the challenges faced by unemployed workers in securing new positions, suggesting a lengthening duration of joblessness. Additionally, the four-week moving average for initial claims edged up by 1,500 to 226,000, reflecting underlying fluctuations in the data.

On an unadjusted basis, initial claims rose sharply by 22,663 to 274,734, driven by notable increases in New Jersey (+3,973) and Tennessee (+2,006). These regional trends underscore the unevenness in the labor market’s recovery, with certain states experiencing greater pressures. The overall data provides a nuanced view of the US labor market, which continues to exhibit resilience despite persistent economic headwinds.

Sub-Saharan African Economies

 

United Kingdom: The British economy stalled in Q3 2024, with growth revised down from the initial estimate of a 0.1% increase, falling short of the revised 0.4% expansion in Q2. On the production side, the services sector saw no growth, downgraded from the initial estimate of 0.1%, with the largest negative impact coming from financial and insurance activities (-0.6%). Additionally, production contracted by 0.4%, worse than the previously estimated -0.2%, driven by a 2% decline in electricity, gas, steam, and air conditioning supply. In contrast, construction expanded by 0.7%, slightly below the initial 0.8% estimate. On the expenditure side, exports (-0.5% vs -0.2%) and imports (-2.5% vs -1.5%) were revised lower, though net trade improved. Household spending maintained its 0.5% growth, business investment was revised higher to 1.9% (from 1.2%), but government consumption grew by just 0.1%, falling short of the anticipated 0.6%. These gains were partially offset by a 0.6% decline in gross capital formation, particularly due to lower acquisitions relative to disposals of valuables.

Egypt: The Central Bank of Egypt held its benchmark interest rate at 27.25% in December 2024, maintaining record-high borrowing costs for the tenth consecutive month to curb inflation. Inflation eased to 25.5% in November, down from 26.5% in October, driven by declining food prices and restrictive monetary policies, though it remains well above the 7% target. Core inflation also declined to 23.7%. Persistent inflationary pressures stem from geopolitical tensions and fiscal measures like fuel price hikes. To manage price shocks, the CBE extended its inflation targets, aiming for 7% by Q4 2026 and 5% by Q4 2028, without additional rate hike.

Uganda: Uganda’s economy grew by 6.7% y/y in Q3 2024, up from a revised 6.2% in Q2. Primary activities expanded by 8.7%, driven by cash crops (13.3%) and food crops (9.6%). Secondary activities rebounded (5.9%), led by construction (7%) and manufacturing (6.1%), while services grew 5.6%. On a quarterly basis, GDP rose by 2%, following a 2.4% gain in Q2.

 

Domestic Economy

Major updates during the week:

  • The Nigerian Communications Commission (NCC) will approve a long-awaited telecom tariff hike, effective January 2025, this comes after over a decade of lobbying by operators who face mounting operation costs amid high inflation.
  • Nigeria’s net foreign exchange inflow dropped by 2.97% to $14.46bn in Q3 2024, compared to $14.89bn in Q2, despite a 75.91% year-on-year increase from $8.22bn in Q3 2023.
  • The CBN and the NCC have issued a final directive to resolve the N250bn Unstructured Supplementary Service Data (USSD) debt dispute between Deposit Money Banks (DMBs) and Mobile Network Operators (MNOs).

Nigerian equity market: Domestic bourse witnesses yuletide gains as ASI edged higher by 0.99% 

In a shortened three-day trading week, the Nigerian stock market maintained its bullish momentum as the All-Share Index rose by 0.99% to 102,133.30 points, up from 101,129.09 points recorded last week. Investors saw significant gains, with market capitalization climbing by ₦612 billion to ₦61.912 trillion. Top-performing stocks included PZ (+26.09%), MRS (+21.00%), STERLINGNG (+13.00%), and MTNN (+10.54%). Sector-wise, four of the five major sectors closed in the green, with the Insurance sector leading the pack with a 7.87% gain. However, the Oil and Gas sector recorded a marginal decline of 0.12%.

Nigerian fixed-income market: Mixed sentiment dominates the fixed income market.

Despite a shortened trading week, the fixed income market experienced mixed sentiment. At the treasury bills auction, the DMO successfully issued ₦332 billion, matching the amount on offer, with the stop rate for the 1-year maturity rising by 10bps to 22.90%, while other stop rates remained unchanged. The secondary treasury bills market ended the week on a positive note, as the average yield fell by 21bps week-on-week to 25.49%, driven by strong buying interest, particularly in mid-tenor maturities. Conversely, the bond market closed slightly negative, with the average yield increasing by 2bps to 19.75%. Meanwhile, the Eurobond market maintained its negative trend, with average yields rising to 9.67%. Looking ahead, we anticipate a relatively subdued trading session next week as market participants finalize their books for the year.