Business and Consumer Confidence Rebound – Survey


A report on a survey of business and consumer confidence reveals a growing optimism for growth in the Jamaican economy in the coming year. The survey, which was commissioned by the Jamaica Chamber of Commerce (JCC) in association with the United States Agency for International Development (USAID), showed that business and consumer confidence rebounded significantly during the recent third quarter period of 2003 when compared to the previous quarter.
The research, which was conducted by Market Research Services Limited, for the period July to September, recorded a positive outlook as opposed to the period from April to June.
Giving an analysis on business confidence at a press briefing on Tuesday (Oct. 7) at the Terra Nova Hotel in Kingston, Professor Richard Curtin, Head of the Survey Research Centre at the University of Michigan pointed out that business confidence rose by 23 per cent from 80.5 per cent to 99.4 per cent. He added that 59 per cent of all Jamaican firms had met or exceeded their profit goals for the same period.
The survey covered approximately 100 firms in all the sectors from small, medium to large organisations with employees of less than ten, 10 to 50 and 50 and over.
Professor Curtin pointed out that the economy was “heading back up” following “a volatile series”, which began after the terrorists attacks on September 11, 2001. The economy, he said, eventually improved, reaching its peak just before the election period last year and then dipped in early to mid 2003 with the gulf war, the slide in the Jamaican dollar, increases in the price of oil and the SARS epidemic, but is now showing signs of recovery.
“Most Jamaican firms expect the inflation rate to rise, but at a slightly lower rate than they expected in the last quarter,” Professor Curtin said. The data also showed that there was an improvement in the business climate and that more Jamaican firms, “thought that it was a good time to invest”.
Professor Curtin informed that the number of new investments rose to 35 per cent in the third quarter from 28 per cent in the second quarter, and the number of firms that expected a larger profit was 43 per cent, up from 31 per cent of all firms in the previous report. In addition, 51 per cent of businesses expect their financial balance sheet to be better next year, up from 36 per cent as recorded in the second quarter.
He noted however, that though firms benefited from increased competitiveness of export goods when the Jamaican dollar devalued recently, many complained about the rise in the cost of capital to make those investments. He argued that both situations worked to offset each other, but that the balancing effect was a slight improvement in favour of business firms.
Professor Curtin pointed out that the data revealed a 20 per cent decrease in business expectation of a worsening economic situation for the country.
Turning to consumer confidence, Professor Curtin pointed out that most consumers believed that the economy was improving, but added that this improvement did not better their current job prospects. He added however, that most expected that as the economy improved, this would eventually get better. “They expect slightly larger gains in their personal incomes and their expected plans have improved slightly,” the Professor noted.
This improvement in expectation had risen from 82.7 per cent to 98.2 per cent and “had erased the second quarter decline.”
Mr. Curtin mentioned that the improvement was widespread across Jamaica, though the sentiment was strongest among persons living in tourist areas and in Kingston. Rural folks, he said were less positive about the improvement in the economy.
The data further showed that 35 per cent of all Jamaicans expect an increase in their incomes next year. This is up from 28 per cent in the last quarter. In addition, 53 per cent of all Jamaicans expect their living standards to improve.
According to Professor Curtin, planned purchases of homes, cars and vacation have improved in the third quarter when compared to the second quarter of 2003.
Homes went from six per cent to eight per cent of persons expecting to buy, cars from 10 per cent to 15 per cent and vacations from 21 per cent to 23 per cent.

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