Consumer confidence dips, businesses calm despite war worries
Published:Wednesday | April 27, 2022 | 12:09 AM
Consumer confidence inched down three points, while business confidence stayed flat during the March quarter, muted by expectations of adverse impacts from commodity price spikes.
The trend shows both indices trailing pre-pandemic levels, but higher than 2021 and 2020 levels.
“At this point in time, there is hardly any change in consumer confidence and hardly any change to business confidence, but we believe that the indications are good. The next quarter will determine if the [indices] are actually solid,” said Don Anderson, pollster and CEO of Market Research Services Limited, on Tuesday, as he presented the findings of the quarterly Jamaica Conference Board Survey of Business and Consumer Confidence, on behalf of the Jamaica Chamber of Commerce.
For businesses, the impact of Russia’s invasion of Ukraine in late February is a primary concern. The war has exacerbated the markets, pushing grain and oil prices to fresh highs, with crude trading above US$100.
“It is important to note at the same time, that the proportion of firms that expect the economy to worsen over the next 12 months has increased by some 6.0 percentage points. This is perhaps no surprise against the background of the impact of the Russia-Ukraine war, amongst other factors,” the confidence report noted.
The index of consumer confidence closed lower in March 2022 at 157.0 points, compared to 160.1 points in December 2021; and 120.7 points in March 2021, 172.9 points in March 2020, and 177.5 points in March 2019.
Business confidence was measured at 131.1 points, compared to 131.8 points last December; 115.2 points in the March 2021 quarter; 129.2 points in March 2020; and 151.3 points in March 2019.
“It is important to note that while the index has increased, the views are almost equally divided between consumers who believe that business conditions will get better, at 39 per cent, and those who believe it will remain unchanged, at 35 per cent,” the report stated.
Businessman Michael Ammar Jr, operator of the Ammar’s department store chain, expressed optimism at the outlook for entertainment since the scrapping of curfew and other measures to stem the spread of the virus. He is co-director of Bacchanal Jamaica, which produces carnival events.
“There’s been thousands of people who haven’t been able to work for three years,” said Ammar of the near closure of the entertainment sector since the onset of the pandemic.
“From a business perspective, we took a long-term view when COVID-19 started. We invested heavily in our plants and we are seeing good results, and we are optimistic about the medium- and long-term prospects.”
Ammar was one of two panellists speaking at the release of the confidence reports. The other panellist, consultant Dr Wesley Hughes, noted that consumers are uncertain but optimistic, while businesses are more cautious. He expressed concern about the impact of the ‘four-Fs’ on households in Jamaica.
“Fuel, fertilizer, food and finance -- most of these are going in the wrong direction,” he said. “The impact of the terms of trade shocks with oil and other commodity prices on the household, could feed into some social unhappiness, if not addressed. That is one of my concerns,” the economist said.