Monthly Economic and Financial Developments, November 2016
Published: Thursday December 22nd, 2016
Indications are that domestic economic activity remained mild during the review period, as tourism output softened, while the ongoing recovery from the effects of Hurricane Mathew—which impacted one in three households—along with a number of varied-scale foreign investment projects, supported the construction sector. A surge in post storm-related hiring led to a decline in the unemployment rate in November over the prior six months. Further, the overall price level fell during the 12 months to September, reflecting the prolonged impact of relatively lower crude oil prices. In monetary developments, net receipts from real sector activity undergirded the increase in external reserves; however, a pick-up in hurricane-related commercial bank financing to the Government, led to a decline in banking sector liquidity.
During the review period, the hosting of a number of international sporting and cultural events provided some support to the tourism sector, although partial data suggests that overall visitor arrivals were relatively soft in comparison to the prior year. In this regard, information from the Nassau Airport Development Company (NAD), showed that aggregate passenger departures through the country’s main airport—net of domestic travelers—softened by 0.9% vis-à-vis November 2015, following a sharp weather-related 16.5% reduction in the prior month. In terms of the breakdown, United States’ traffic firmed by 0.6% in November, an improvement over the 20.0% contraction in the previous month; however, departures to non-US countries narrowed by 8.8%, vis-à-vis a 3.2% gain in October. An analysis of year-to-date data showed a slight 0.8% improvement vis-à-vis the comparable period of 2015, with US departures firming by 1.6%, while the non-US component declined by 4.1%.
The latest data from the Department of Statistics’ Labour Force Survey revealed that the unemployment rate fell by 1.1 percentage points relative to May 2016, to 11.6% and by 3.2 percentage points over the prior year. A breakdown of the results—which included two new markets—showed that of the 4,025 persons hired, approximately 34.4% (1,385) were directly linked to the rebuilding efforts following Hurricane Mathew, resulting in a 16% gain in construction sector employment.
In terms of the major job markets, broad-based declines over the six-month period were recorded in Grand Bahama (by 1.3 percentage points to 13.3%), Abaco (by 1.1 percentage points to 9.1%) and New Providence (by 0.3 percentage points to 12.9%), while jobless rates of 4.0% and 8.0% were recorded for Bimini and Exuma. Despite the overall improvement in the labour market, unemployment among young persons (15-24 years) remained elevated at 25.1%, in comparison to 25.8% in May.
Underpinned by the contraction in global oil prices, the All Bahamas Retail Price Index fell marginally by 0.07% in the year to September, a reversal from a 1.46% increase in the prior period. Driving this decline was an acceleration in the reduction of the housing, water, gas, electricity and “other” fuels component—which accounts for one-third of the index—to 2.3% from 0.2% in the previous year. Similarly, the average cost for transport contracted by a further 5.4%, following the previous year’s 3.7% reduction. In addition, significant slowdowns in inflation rates were recorded for recreation and culture (by 4.5 percentage points to 4.11%), alcohol beverages, tobacco & narcotics (by 4.5 percentage points to 2.6%), furnishing, household equipment & routine household maintenance (by 3.7 percentage points to 2.0%), health (by 3.2 percentage points to 7.8%), food & non-alcoholic beverages (by 3.0 percentage points to 1.1%), and restaurants & hotels (by 2.9 percentage points to 1.6%). Providing a slight offset, accretions to the average costs for miscellaneous goods & services and education firmed by 1.1 and 0.2 percentage points to 1.6% and 5.3%, respectively.
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