New record for consumer confidence Business confidence remains high
Consumer confidence in Jamaica hit an all-time high for the second quarter of 2019 with 183.4 points compared to the 177.5 points recorded in the first quarter, according to a survey undertaken by Market Research Services (MRS) on behalf of the Jamaica Chamber of Conference (JCC).
In presenting the findings, managing director of MRS, Don Anderson said from 2014 to 2019 there has been a consistent increase in the level of consumer confidence. He added that consumers' confidence is driven by their views of government initiatives, observation of infrastructural changes and development, expectations for and being able to obtain jobs, as well as evidence of growth in some sectors of the economy.
“Consumers then are pretty buoyant about the economy and have sound and solid expectations for improvement in business conditions, a fact which further feeds into expectations for income gains,” Anderson said in the report summary presented at Spanish Court Hotel in Kingston, yesterday.
But despite the positive outlook, the report indicated that consumers do not anticipate purchasing either a home or a car, or taking a vacation in the year ahead.
Anderson noted that while consumers expect a general increase in prices, they remain optimistic that their standard of living will remain unchanged. Meanwhile, just over half the respondents are convinced that their income will get better over the next 12 months.
“This level of optimism amongst consumers could best be demonstrated by the view held by the majority of persons that they will be able to afford school fees for their children,” Anderson highlighted, despite the slight decrease in the number of people who receive remittances from abroad.
Despite strong consumer confidence, Anderson highlighted that for the first time since 2018's second quarter, business confidence dipped, “albeit only marginally from 151 to 150.7”.
He added that while relatively flat, the less than one percentage point change is not what is concerning, but rather the key factors that influenced it. According to the results of the survey, a significant number of firms indicated that profits were less than what they were expecting.
“Close to six in every 10 firms (59 per cent) say they are not on track for meeting the goals set for their firm in 2019, but 41 per cent of firms are. The hindrances are finance (20 per cent), competition (15 per cent), and instability of the Jamaican dollar (13 per cent),” the report stated.
This, coupled with the high crime rate and the decreased optimism among firms to invest and or expand, contributed to the downward trend of the Business Conditions Index. This, according to JCC, was first observed in the last four quarters, as the second quarter of 2019 recorded 167.9 points compared to the 184.4 points recorded in the first quarter.
While 67 per cent of the firms remain convinced that it is a good time to invest, those that think otherwise increased from 19 per cent to 25 per cent, pointing to competition, the rate of exchange, and the high crime rate.
“They do have serious concerns about the crime level, about the rate of exchange and, in particular, about the fluctuations in the rate of exchange which makes it difficult for businesses to plan long term,” Anderson noted.
Despite current experiences with profits and plans for investment, the survey indicated that the perceived growth in the economy — 30 per cent — and improvement in the country's infrastructure — 20 per cent — were the two reasons why the Expected Economic Index maintained its upward climb from 157 to 172 points, as firms remain optimistic about future economic conditions.
The aim of the JCC's quarterly survey is to provide businesses with the knowledge and information needed to make better business decisions. The index is derived from quarterly surveys of CEOs and senior officers of approximately 100 Jamaican firms and 600 households islandwide, and on business and consumer opinions related to current conditions and future expectations of the economy.