Global Economy

U.S.A: The latest data on U.S. unemployment claims highlighted a healthy labor market, with new applications for benefits dropping to an eight-month low at 211,000 for the week ending December 28, 2024. This reflects a 9,000 decrease from the previous week and aligns with other robust economic indicators, such as steady consumer spending. Labor market stability supports the Federal Reserve’s cautious approach to rate cuts, projecting only two reductions for 2025 after the significant tightening cycle of 2022 and 2023.Continuing claims, a measure of ongoing unemployment, also fell by 52,000 to 1.844 million, despite some regional challenges due to manufacturing slowdowns and natural disasters. Meanwhile, the construction sector showed stagnation, with November spending unchanged due to mixed trends in residential and non-residential projects. Economists attribute the steady but slower job creation in 2024 to cautious hiring by employers amid economic uncertainties.

Sub-Saharan African Economies

Germany: Germany’s labor market held its ground in December 2024, with the seasonally adjusted unemployment rate steady at 6.1%. This figure, while slightly below market expectations of 6.2%, remains near the peak levels last seen in early 2021. The number of unemployed individuals increased by 10,000 to reach 2.869 million, a softer rise than the predicted 15,000, signaling some resilience amid the seasonal slowdown. Andrea Nahles, head of the German labor office, described the December uptick as a predictable outcome of the winter break, which traditionally sees a pause in hiring activity. Despite this seasonal impact, Germany’s unemployment rate for the year rose to 6.0%, up from 5.7% in 2023, reflecting broader economic headwinds that have weighed on job creation.

Kenya: Kenya’s inflation rate rose for the second consecutive month to 3% in December 2024, up from 2.8% in November, remaining within the central bank’s target range of 2.5% to 7.5%. The rise was driven by higher food prices (+4.8%) and a 0.2% increase in transport costs, despite the strong shilling. Monthly consumer prices increased by 0.6% in December, up from 0.3% in November..

Morocco: Morocco’s GDP grew by 4.3% y/y in Q3 2024, up from 2.4% in Q2, the fastest since Q4 2021, driven by strong domestic demand and controlled inflation. Non-agricultural output rose 5.1%, with significant gains in the extraction industry, manufacturing, and construction, while the agricultural sector contracted by 5.2%. The external sector negatively impacted growth as imports outpaced exports.

Nigeria: The Stanbic IBTC Bank Nigeria PMI rose to 52.7 in December 2024 from 49.6, signaling private sector growth after five months of decline. All key sectors reported increased output, with new orders and employment rising. However, inflationary pressures led to higher costs, prompting firms to raise output prices.

Domestic Economy

Major updates during the week:

  • Stanbic IBTC’s December 2024 PMI rose to 52.7, driven by festive demand, marking a second consecutive increase and signaling manufacturing growth that supports Q4 GDP above 3%.

 

  • Nigeria’s Ministry of Finance Incorporated (MOFI) launched a N250bn Real Estate Fund to boost affordable housing, job creation, and economic growth, offering 25-year mortgages and driving real estate sector activities.

 

  • The 2024 Withholding Tax Regulation, effective January 1, 2025, introduces reduced WHT for SMEs, exempts manufacturers, and streamlines tax credit processes, aiming to ease compliance and reduce inefficiencies.

Nigerian equity market: NGX kicks of 2025 on a bullish note as ASI edged higher by 1.42% 

The domestic bourse extended its winning streak in the first week of 2025, with the All-Share Index (ASI) rising by 1.42% to close at 103,586.33 points, up from 102,133.30 the previous week. Investors recorded gains of ₦1.25 trillion as market capitalization increased to ₦63.17 trillion. Positive momentum was driven by buying interests in UCAP (+15.84%), BUAFOODS (+5.09%), and MTNN (+3.09%), which outweighed declines in TOTAL (-6.51%), OANDO (-4.23%), DANGSUGAR (-3.82%), and NGX (-9.17%). Sectoral performance was predominantly bullish, with four out of five major sectors posting gains, led by the Insurance sector’s 26.91% growth, while the Oil and Gas sector dipped by 0.45% WoW. This strong market start reflects sustained investor confidence.

Nigerian fixed-income market: Bearish sentiment persists in the bond market.

Kicking off the new year, investors expressed buying interest in the treasury bills market causing the average yield to decline by 10 basis points to close the week at 25.46%. This buying interest was more pronounced on the short-tenor maturities with the 6-Mar-2025 and 27-Mar-2025 declining by 80 and 134 basis points respectively. Conversely, the bond market maintained its bearish sentiment as the average yield increased by 3 basis points to close the week at 19.78%. In the Eurobond space, Investors expressed interest in Nigeria’s Eurobond causing the average yield to decline by 18 basis points week-on-week.  Looking ahead, we expect more buying interest in the next trading week as system liquidity remains positive.