U.S unemployment rate dropped to 5.1 percent for the first time in 7 years. The last time similar data was recorded was in April 2008 when unemployment rate was 5 percent prior to global economic crisis that pushed unemployment as high as 10 percent in the 4Q of 2009. At this point it can be said that the US has attained full employment based on Federal Reserve definition of full employment in the economy.
The positive report was as a result of employers upbeat about America’s demand prospects as indicated by the decrease of $3.3 billion in trade balance deficit released on Thursday by the Bureau of Economic Analysis. The better than expected report shows a reasonable surge in exports and increase in manufacturing for the month of August. Although, ADP Non-Farm Employment change increased by 13,000 from 177,000 recorded in July to 190,000 in August yet it fell short of economists’ expectation of 204,000.
A senior economist at Moody’s Analytics Inc. was quoted saying “All in all this a very good report, based on the data it doesn’t seem that global financial and international markets is significantly affecting the U.S economy”
|Key Economic Data of the Week|
|ISM Manufacturing PMI declined from 52.7 in July to 51.1 in August|
|ISM Non-manufacturing PMI dropped to 59.0 from previous 60.3, better than expected 58.3|
|ADP Non-Farm Employment Change increased from 177,000 to 190,000 in August, worse than expected (240,000)|
|Trade Balance, deficit sank from 45.2 B to 41.9B, better than expected 43.2B|
|Unemployment Claims jumped from 270,000 to 282,000 in August, falling below expected 273,000|
Change in the total number of employed workers during August (excluding those in the farming industry) increased by 173,000, the lowest since August 2014. According to the report from Bureau of Labor Statistics, manufacturing and mining lost jobs but job gains occurred in health care and social assistance and also in financial activities.
Non-manufacturing sector has been the driving force of the economy for months, and contributed the most to the 5.1 percent reduction in unemployment rate.
The report clearly shows that manufacturing sector is still struggling and yet to fully picked up, the data released by Institute for Supply Management (ISM) indicates economic expansion but when compared to what was obtained in July (52.1) and expected result of 52.6, it is low and almost at 50.0 expansion’s bottom level of the ISM indicator.
The positive data from unemployment rate has been overshadowed by the poor data from manufacturing leading to poor non-farm payrolls data. The better than expected trade balance was as a result of the increase in business activities of the service sector, which is further validated by the surge in unemployment claims to 182,000 according to the data released by Department of Labor. If the jobs created were substantial why the increase in unemployment claims?
Overall the data is mixed, stronger dollar is still hindering exports and continuous fall in global prices is slowing down activities in mining industry, for now it seem the service industry is the powerhouse of the economy but for how long? However, the probability of Fed increasing interest rate might just as well have been increased, it’s needed to curb inflation and soften dollar strength.
Our view on USDJPY still stand.
FG Borrowed $5.9B To Fight COVID-19 and Implement Budget – Minister of Finance
The federal government borrowed about $5.9 billion in 2020, to tackle the COVID-19 pandemic and implement its budget. The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, revealed this yesterday.
A statement issued by her Special Adviser, Media and Communications, Mr. Yunusa Abdullahi, yesterday, indicated that the minister told the Collaborative Africa Budget Reform Initiative (CABRI) General Assembly during a webinar, that the federal government had to move quickly to save the economy.
Speaking on Nigeria’s fiscal response – short term interventions and impact on public finances, as an immediate fiscal response, Mrs. Ahmed said: “We did the following: Procured a $3.4 billion loan from the International Monetary Fund (IMF) and about $2.5 billion in local currency from the domestic capital market to support the 2020 budget implementation), among others.”
She noted that the government then packaged a N500 billion for COVID-19 Crisis Intervention Fund in the 2020 revised budget, as part of a N2.3 trillion Economic Sustainability Plan.
Mrs. Ahmed said that the government had begun the process of moving the economy away from its primary dependence on oil for revenues and foreign exchange, and making steady gains in addressing infrastructure and human capital challenges before the pandemic hit the global economy.
With COVID-19, Nigeria’s Bonny Light crude oil price fell from a peak of US$72.2 per barrel on January 7, 2020 to below US$20 by April 2020.
She said, “In effect, the US$57 crude oil price benchmark approved in the 2020 budget became unrealistic triggering the need to adjust the following variables: reduction of crude oil benchmark price from US$57 per barrel to US$28 per barrel; reduction of daily crude oil production benchmark from 2.18 million barrels per day (mbpd) to 1.9 mbpd; adjustment of the official exchange rate to N360/US$1 from N305/$.”
Mrs. Ahmed revealed that part of the federal government Supplementary Budget on COVID-19 would be spent on the procurement of 29. 588 million doses of the Johnson & Johnson vaccine.
No Plans To Relocate AFRICOM HQ To Nigeria Or Any Part Of Africa- U.S. Replies Buhari
The United States has said there is no plan to relocate its Africa Command from its current base in Germany to Nigeria or any other part of Africa despite the worsening state of insecurity in the region.
The US gave the response barely two weeks after President Muhammadu Buhari appealed to the US government to consider relocating AFRICOM to Africa to assist Nigeria and other adjoining countries to combat worsening terrorism, banditry and other security crises.
The President made the plea in a virtual meeting with the US Secretary of State, Antony Blinken, on April 27.
Germany-based Africa Command (AFRICOM) is the US military headquarters that oversees its operations in Africa.
Buhari’s request followed a series of recent military casualties in Nigeria’s decade-long fight against Boko Haram terrorists, fresh expansion of the insurgents’ bases to Niger and Nasarawa States, and heavy waves of abductions and killings by bandits in the North.
Buhari said, “The security challenges in Nigeria remain of great concern to us and impacted more negatively, by existing complex negative pressures in the Sahel, Central and West Africa, as well as the Lake Chad Region.
“Compounded as the situation remains, Nigeria and her security forces remain resolutely committed to containing them and addressing their root causes.
“The support of important and strategic partners like the United States cannot be overstated as the consequences of insecurity will affect all nations, hence the imperative for concerted cooperation and collaboration of all nations to overcome these challenges.
“In this connection, and considering the growing security challenges in West and Central Africa, Gulf of Guinea, Lake Chad region and the Sahel, weighing heavily on Africa, it underscores the need for the United States to consider relocating AFRICOM headquarters from Stuttgart, Germany to Africa and near the Theatre of Operation.”
However, the US government on Thursday ruled out any plan to relocate AFRICOM from its current base in Germany to Nigeria or any part of Africa.
According to the United States Department of Defence’ Pentagon, previous studies have shown that the cost of relocating AFRICOM from Germany to Africa is very huge.
In an emailed response to The PUNCH, the Pentagon said although it would continue to value Nigeria and other countries in Africa as important partners, the American government would not consider relocating AFRICOM to any part of the African continent at the moment.
This newspaper had asked if the US would consider Nigeria’s request to relocate AFRICOM to the continent.
“It would be inappropriate to speculate on any future actions. However, at this time, moving this headquarters (AFRICOM HQ) to Africa is not part of any plans, but USAFRICOM’s commitment to their mission, our African and other partners, remains as strong today as when we launched this command more than a decade ago,” US Pentagon spokesperson, Ms. Cindi King, said.
King also ruled out any plan to consider Buhari’s request in an ongoing global US defence review.
She said, “Although there is an ongoing Global Posture Review, the relocation of Combatant Command headquarters is outside the scope of its assessment. In the case of AFRICOM, previous studies have concluded that the cost associated with the relocation of this headquarters is significant and likely to incur the expense of other engagement opportunities and activities that more directly benefit our valued African partners.
“We greatly value the partnership with Nigeria and appreciate President Buhari’s recognition of the United States’ positive contribution to African peace and security, as well as other regional partners that have made similar past pronouncements. The United States remains committed to continuing our close partnership with African countries and organisations to promote security and stability.”
It’s ‘near impossible’ for America to accept Buhari’s invitation –Campbell, ex-US ambassador
Meanwhile, a former United States Ambassador to Nigeria, John Campbell, has listed reasons why it is “unlikely or near impossible” for the US government to relocate AFRICOM from Stuttgart in Germany to Nigeria or any part of the continent.
He said aside from the fact that the cost of doing so is very huge, the Nigerian military had proved to be a difficult partner for the US over the years.
Emefiele Says CBN Will Resist All Attempts to Continue Maize Importation
The Central Bank of Nigeria (CBN) has vowed to resist all attempts to continue the importation of maize into the country.
Godwin Emefiele, the governor, CBN, in a statement titled ‘Emefiele woos youths to embrace agriculture’, said: “the CBN would resist attempts by those who seek to continually import maize into the country.”
Emefiele, who spoke in Katsina during the unveiling of the first maize pyramid and inauguration of the 2021 maize wet season farming under the CBN-Maize Association of Nigeria Anchor Borrowers’ Programme, said maize farmers in the country had what it takes to meet the maize demand gap of over 4.5 million metric tonnes in the country.
“With over 50,000 bags of maize available on this ground, and others aggregated across the country, maize farmers are sending a resounding message that we can grow enough maize to meet the country’s demand,” Emefiele said.
He explained that the maize unveiled at the ceremony would be sold to reputable feed processors.
He added that this would in turn impact positively on current poultry feed prices, as over 60 per cent of maize produced in the country were used for producing poultry feed.
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