Business, consumer confidence strongest since global meltdown
Published:Wednesday | October 6, 2010 | 12:00 AM
Dionne Rose, Business Reporter
Consumer confidence in Jamaica reached its strongest in the third quarter since the onset of the global meltdown in the latter period of 2008, while businesses, uncertain about the present, remained confident about the future of the economy.
"Overall, the data was quite positive and indicate that firms remained convinced the economy was headed in the right direction," said Professor Richard Curtin of the University of Michigan in his report on the quarterly surveys of business and consumer confidence in the island, on behalf of the Jamaica Chamber of Commerce's Conference Board.
In fact, the index of current business conditions slipped marginally in the third quarter against the second, as did the assessment by firms of existing business conditions.
But when it came to what firms expected going forward, the index remained the same as in the second quarter - 109 points.
"Ongoing changes in government economic policies, as well as the global recovery were cited as positives for the Jamaican economy as frequently as they mentioned their impatience with the pace of improvement," Curtin said of the attitude of managers and business owners in his report.
The broad optimism among firms was apparent among consumers, whose confidence index rose 7.5 per cent to 109.8 points, its highest, as was the case with the business index, since the fourth quarter of 2008.
"On the consumer side, confidence improved and the economy is expected to improve," Curtin told reporters and business leaders at yesterday's launch of the quarterly report.
"So, this is still very much like what business firms told us: job prospects, they expect to improve."
Significantly, though, only one per cent of consumers felt that jobs were currently plentiful, the fifth consecutive quarter that his dire statistic has held. However, 23 per cent expected the employment situation to improve in the year ahead. Those who expected the economy to worsen fell to 38 per cent from 51 per cent at the start of the year.
Consumers optimistic
Improved consumer confidence, notwithstanding, only 32 per cent expected improved household incomes in the year ahead, slightly better than the 30 per cent in the second quarter and way off the peak of 60 per cent in the third quarter of 2007.
Paradoxically, with low expectations of rising incomes, consumers expressed intention to make purchases.
"You know those two don't mix," Professor Curtin said. "I think I read strong purchase plans as a reflection of their optimism more than a reflection of their financial situation.".
Home-buying plans were reported at 11 per cent, up from 10 per cent last quarter and a year ago, while those who were thinking of buying vehicles rose three points, to 21 per cent and against 17 per cent a year earlier.
Planned vacations fell slightly to 31 per cent in the third quarter, just below the 32 per cent in last quarter's survey and the 34 per cent recorded one year ago.
With regard to firms, twice as many firms expected the economy to improve rather than worsen during the year ahead. Better economic conditions were anticipated by 46 per cent of all firms, just below last quarter's 52 per cent.
The data also showed that planned investment in new structures and equipment remained higher than the average levels recorded in the past decade. Firms also expected higher profit margins during the year ahead.