Business confidence dips but consumer optimism strengthens
Don Anderson, Managing Director of Market Research Limited, shared the latest findings of the Business and Consumer Confidence Survey on Tuesday.
Business confidence dipped for the first time since the second quarter of 2018, while consumer confidence strengthened during the second quarter of 2019 recording 183.4 points.
The marginal decline in business confidence from 151 to 150.7, is relatively flat but still needs watching, says Don Anderson, Managing Director of Market Research Limited, the company commissioned to conduct the Business and Consumer Confidence Survey.
He believes the dip in optimism is due to firms’ actual financial performance, which is lower than their expectations.
“Over the last five quarters, we have witnessed a gradual but steady growth in the degree of confidence that businesses repose in the economy and their own businesses,” Anderson said.
He was speaking at briefing hosted by Jamaica Chamber of Commerce at the Spanish Court Hotel on Tuesday.
Perhaps more noticeably and of concern are the readings on some of the variables that comprise and drive this index. One key factor, the level of expected profitability was not realized.
Indeed, fewer firms reported profits were expected, down to 55 per cent compared to 62 per cent in the 2019 first quarter.
“So, most firms reported that they were not on track for reaching their goals,” Anderson added.
Commenting on the consumer confidence survey results Anderson said: “This is not surprising as data over the years indicate that consumers tend to be more unpredictable than businesses in their perspective of the economy.”
The results of the survey attribute the increased level of confidence amongst consumers to a few factors. For instance, 31 per cent of consumers expect new jobs and have observed that new jobs are being created and obtained while 16 per cent expressed positive views of government’s initiatives.
Other contributing factors are 16 per cent observe infrastructural changes and evidence of growth in some sectors such a tourism and BPOs.
The survey also revealed a glimpse into where businesses are proposing to increase capital expenditure. The top sectors of interest comprise farming and agriculture (including mining, quarry), wholesale and retail, manufacturing, transportation, storage and communications, tourism and hospitality and other services such as personal care. Other key areas of investment included construction and installation and finance, insurance, real estate and business services.
According to a representative from the National Commercial Bank, sponsor of the JCC Business & Consumer Indices Release, Wayne Blake, Relationship Manager – Commercial and Consumer Banking Division, NCB Corporate, what the survey has revealed is consistent with historic trends.
“Consumer Confidence is up but business confidence is flat, and I wouldn’t say I’m necessarily overly concerned because when you look at historic trends the overall business confidence is still at a record high. I think what we need to do is just watch and see what is happening in the economy with the new developments taking place, we’ll see how that will impact us”.
Blake also believes NCB’s sponsorship of the JCC Business and Consumer Indices is very important because the information presented will assist in guiding strategic decisions such as the sectors to focus on, where growth trends exist and to be aware of problems so businesses can plan.
Sub-Sponsor representative, Michael Johnson, Senior Marketing Officer of Jamaica Stock Exchange (JSE) also shares the view that the confidence results is very significant to the Jamaican businesses and consumers.
“We understand how the market functions and in the business confidence that persons invest, we need to have a clear picture of what to expect and where opportunities lie. We hope consumers will use these results to guide their decisions because the best decision is an informed decision whether personally or to make capital investment or just overall increasing their wealth opportunities”.
The aim of the JCC Business and Consumer quarterly Indices survey is to provide businesses with the knowledge and information needed to make better-informed business decisions.
The Index is derived from quarterly surveys of CEOs and senior officers of approximately 100 Jamaican firms and 600 households’ islandwide, on business and consumer opinions related to current conditions and future expectations of the economy.