Business optmism soars, while consumers lose confidence

BY KARENA BENNETT
Business reporter
bennettk@jamaicaobserver.com

Wednesday, January 17, 2018

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Business and consumers shared opposing views about economic prospects of the country for the fourth quarter of 2017 as Jamaica continues to grapple with crime and the uncertainty of where the economy will be over the next 12 months.

The Jamaica Chamber of Commerce (JCC) yesterday reported that business optimism soared to the second-highest level Jamaica has seen since 2001, reaching an index of 142.6 for the fourth quarter — marginally below the all-time peak of 144.6 in the first quarter of 2016. Concurrently, the country saw a two percentage point decline in consumer confidence, reaching an index of 148 for the three months ending December 2017.

It's the third-consecutive quarter that business and consumer indices have moved in opposite directions since the start of 2017. Before that the country only disagreed on confidence levels during the second quarter of 2016.

Pollster Don Anderson said the increased confidence expressed by business owners was largely due to convictions that the economic indicators are moving in the right direction, as well as confidence in the strategies that have been put in place to tackle crime.

Jamaica's business confidence index at 142.6 was 5.4 percentage points higher than the 135.2 experienced at the end of third quarter 2017 and 0.4 percentage points above the corresponding fourth quarter of 2016.

“The Government's policy specifically relating to crime has gone some way in enhancing the optimism reported as crime and violence has consistently negatively impacted business confidence over the years. Nothwithstanding, crime and violence is still seen as the number one problem facing the country,” managing director of Market Research Services, Anderson, stated in the JCC's fourth-quarter summary report yesterday.

“Again we note that the murder figures are above 60 since the start of the year, and that is alarming. Businesses are therefore making the point quite clear that the biggest drawback to the realisation of all that they are looking forward to is the level of crime,” he said.

He added that the introduction of the zone of special operations (ZOSO) brought some optimism among business firms, with the perceived impact of crime falling by five percentage points.

“So there was a beginning of a sentiment that suggested that the crime measures were likely to make a difference in the whole outlook on the future. With the incidence of crime of the first three weeks of this year we are left to speculate, but data from the first quarter of 2018 will tell us how they feel about the impact of crime on their businesses,” he reasoned.

According to the report, 42 per cent of firms reported looking to increase profitability for 2018, while another 24 per cent seek to develop their organisation. Increased efficiency measures will be undertaken by 16 per cent of firms, while another 13 per cent plan on expanding infrastructure and introducing new products. Anderson said 11 per cent of firms also seek to improve consumer experience for 2018.

Consumer confidence, while remaining strong, was 148 in the fourth quarter of 2017 slightly below the 151.1 a quarter earlier. While still strong, the index wavered between a low of 138.7 points to a high of 151.1 point over the last four quarters. Consumer expectations about economic conditions in Jamaica peaked at 161.4 during the third quarter of 2017.

Anderson said the dip represents declines in both the index of current economic conditions and the index of consumer expectations.

“The data suggest that consumers are uncertain about where the economy will be in the next 12 months with two percentage points more expecting it to be better, but an identical two percentage points more expecting it to get worse,” he said.

There was no change in consumers' views about the current job situation with the large majority, 71 per cent, sharing the view that jobs are in short supply. Still, the report said consumers' expectations for an improved standard of living continues to rise with such expectations reaching another all-time high and income gains anticipated by 48 per cent of the total number of people surveyed in the fourth quarter of 2017.

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