Firms say time is ripe for expansion

Both consumer and business confidence at new highs

Business reporter

Wednesday, January 23, 2019

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Business operators' willingness to invest in new plant and equipment hit an all-time high during the last three months of 2018, soaring 10 points above the record of 141 points set in 2016.

The data, which was released by the Jamaica Chamber of Commerce (JCC) yesterday, said more than 70 per cent of the firms surveyed continued to agree that the time was right for expansion. The results exceeded the 58 per cent average in 2017.

“Further, just over half of all the firms surveyed, 55 per cent, reported having solid plans to increase the level capital investment in their firms over the next 12 months,” the JCC said in its fourth-quarter Business and Consumer Confidence Index.

In line with capital investment plans, 71 per cent of firms anticipate improvements in profitability, while 79 per cent are looking for gains in the year ahead.

Pollster Don Anderson, in presenting the findings, added that approximately one in every four firms has their eyes set on increasing sales, and ultimately profit, in 2019.

“They intend to achieve this overall growth by increasing their customer base, improving the quality of their customer service, and seek to remain relevant in the marketplace,” he said.

Anderson, however, noted that crime and its associated costs have once again been named the number one barrier to expansion during the 2018 fourth quarter, as opposed to the devaluation of the Jamaican dollar which was cited as the main factor in the third quarter of 2018.

Overall, confidence of the local business sector increased to 147 points, consistent with the fourth quarter of 2017 where a similar seven-point gain was reported. The JCC reported that the gain was attributable to the “feel good inherent in the busy Christmas season”.

Consumer confidence also strengthened further in the fourth quarter of 2018, moving up to 175.5 points compared to 172.6 points in the third quarter. Anderson reasoned that at the heart of this confidence is consumers' anticipation of jobs being created.

The JCC, however, highlighted that while the index at 147 points represents a new record since the start of the survey in 2001, the rate of increase was significantly slowed between the third and fourth quarter of 2018 when compared to the surge in confidence between the second and fourth quarter of last year.

Like business operators, consumers' assessment of the current business conditions continued its upward trend in the fourth quarter. The index moved up to 110 from 106 points in the third quarter of 2018.

“The proportion of consumers who assessed business conditions as being good grew by three points to 25 per cent. This again resulted in the large majority, 85 per cent, who had a positive impression of business conditions,” the JCC reported.

“There is also much anticipation for further improvement by 41 per cent of consumers, resulting in an increase in the Index of Expected Business Conditions from 121 points in the third quarter to 125 points,” it continued.

Consumers also had a positive view of the economy driven by their perception of jobs being created — up 20 per cent — and their confidence in the Government's efforts and initiatives, according to the JCC report.

Nevertheless, 31 per cent of Jamaicans were not as convinced about the future economic outlook, and anticipate a worsening economy due to lack of employment (16 per cent), a high crime rate (14 per cent), high prices (14 per cent) and stagnant economy reflected by high cost of living (12 per cent).

Still, consumers remained stable in their plans to purchase a car or take a vacation. The JCC highlighted that a marginal change of 2 percentage points in the proportion of persons who believe they would be able to purchase a car or take a vacation was reported, while there was no change in the 9 per cent who anticipated being able to purchase a home.

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