Business and consumer confidence dips — but still remains high
The level of confidence in the economy by both businesses and consumers has declined in the third quarter of 2019, though the indices are just short of the highest they have ever been, according to a survey undertaken by Market Research Services (MRS) on behalf of the Jamaica Chamber of Commerce (JCC).
Managing director of MRS, Don Anderson reported that declines in consumers’ perception of current business conditions, and expectations for jobs in the future for the third quarter of 2019, are the reasons for the break in the upward trend in consumer confidence over the last seven quarters.
“When we see the trends of the last five years, we will see that we’re at a period in time when the indices are the highest they have ever been, but it is noticeable that over the last quarter there has been a fall-off , and it has to be noted and watched very carefully,” Anderson said.
CONSUMER CONFIDENCE
Consumer confidence in the economy has declined from its all-time high of 183.4 points in the second quarter to 179.9 points in the period under review.
According to Anderson, this decline is more pronounced among people living outside of urban areas who are the least optimisic and reported the greatest decline in optimism, from 174.4 points to 166.7 points.
“Consumers on the whole are confident about current jobs but are less so about future jobs coming on stream to absorb the growing demand and expectations of consumers. Accordingly, the optimism about future jobs is lower, down from 127 points in quarter two to 120 points [in quarter three],” Anderson said in the report summary presented at Courtyard by Marriott in New Kingston on Tuesday (October 15).
“Twelve per cent of consumers now feel that jobs are plentiful — this is an extremely low figure, but it is the highest it has ever been. But generally therefore, consumers are weary about the availability of jobs,” he continued.
Anderson noted that while consumers’ expectation for income gains remained stable, year-to-date average percentage receipt of remittances is 33 per cent, an all-time low when compared to the peak of 38 per cent in households in 2016.
The report also indicated that the majority of consumers do not anticipate purchasing either a home or a car, with 40 per cent anticpating taking a vacation in the year ahead.
BUSINESS CONFIDENCE
Concurrently, while business confidence marginally dipped in the second quarter of 2019, the data for the third quarter reports a meaningful decline in the index from 150.7 points to 141.2.
“The third quarter has confirmed that business confidence is indeed down. This decline continued into the third quarter with index falling eight percentage points, a reduction which is of course quite noticeable and dramatic,” Anderson said.
“The view from business is that current profits are better than expected, however businesses do not remain at the same level of optimism for future profits and business conditions, as the indices dropped from 143 to 129. So while firms are comfortable about where they have been, they’re looking down the road and saying we’re not as quite as confident as we would like to be about how the future looks,” he continued.
Correspondingly, just over 50 per cent of the businesses expressed the view that return on capital invested is as expected, but other firms are of the opposing view that returns were not as good as expected.
While most firms, 64 per cent, remained convinced that it is a good time to invest, this was marginally less than the 67 per cent recorded in quarter two of 2019.