Consumers satisfied with living standard but worried about jobs - confidence survey
Tameka Gordon, Business Reporter
Business confidence for the third quarter of 2014 has largely remained unchanged with businesses maintaining a positive outlook on forecast economic conditions.
Consumer confidence, however, fell amid increasing concerns about future job and income prospects.
Business firms clearly think the new economic policies of the Government are having a favourable impact, said Don Anderson, managing director of Market Research Services, at the release of the confidence indices on Wednesday by the Jamaica Conference Board, the research arm of the Jamaica Chamber of Commerce.
The index of business confidence stood at 112.1 for the July to mid-September quarter, or just below the 1112.8 in the previous quarter, "but well above the five-year low of 84.1 recorded in the last year's third quarter," Anderson said.
Data for the period further confirmed that companies are taking steps to boost production both for the domestic and export markets, Anderson said.
"Firms view prospects for the Jamaican economy more favourably in the latest survey than any time since 2007," the pollster reported.
What's more, for the fourth consecutive quarter, a near-record number of firms expressed intent to increase investments in their businesses during the year ahead, he said.
Forty-nine per cent of companies said it was a good time to expand their productive capacity to take advantage of future economic opportunities, with 39 per cent indicating it was a bad time for expansion, down from the 60 per cent in 2013.
"These robust investment plans for new plant and equipment represent a substantial vote of confidence by business firms in the future state of the Jamaican economy," Anderson reported.
Making reference to additional polls carried out by his firm, Anderson said the businesses have expressed additional ease with the solidity of the policy directions under the IMF Extended Fund Facility (EFF), which have resulted in overhauls of the country's regulatory framework and provides certainty to now firmly plan their investments.
Outlook for profit further remained positive. Asked about future prospects for their profitability, 48 per cent of firms expected greater profits next year, a two per cent drop from the 50 per cent on the previous quarter. Just 21 per cent of companies expected declining profits in the period of review.
Thirty-six per cent of businesses expected improved conditions when asked about their outlook for the national economy for the year ahead, the pollster reported, with a similar amount expecting worsening conditions.
The consumer confidence index fell to 97.8 for the third quarter, down from 100.8 recorded in the second quarter of 2014 and 104.7 at the beginning of the year.
"Confidence has gradually declined since the start of the year as consumers have become increasingly concerned about their future job and income projects," Anderson said.
"Consumers do not expect any positive change in the short term," said Anderson.
Interesting, the third-quarter data revealed an anomaly, Anderson said, in that consumers reported satisfaction with their standard of life given the current economic conditions and the data on expectations.
"There is an anomaly or disconnect there, because despite what it happening, the standard of living is actually better and this is disconnected totally from the data that we have seen so far. We have tested it and we find that this data is actually what people are saying; they are satisfied with their quality of life," the veteran pollster said.
For Anderson, "it is difficult to understand why under the present situation, with incomes as they are, job prospects as they are, and expectations very minimal, that they should be satisfied with the quality of life. But we have made note of it and we are obviously going to check the situation," he said.
Of note he said, was that consumers recognised that the economy has begun to improve, despite noting that "the gains thus far are quite small".
Devaluation, stagnant salaries, scare job opportunities, higher taxes and rising prices continued to be chief on the list of complaints of consumer, the report revealed.
However, the data suggested that consumers believed that the net effect of the new policy measures would ultimately benefit the economy, Anderson said.
Despite the accompanying rise in reports of hardships, consumers reported "substantial gains," during the survey period, he adds.
"These gains represent a significant degree of acceptance and accommodation of recent changes in economic policies."
Of job prospects, there was unanimous opinion among consumers that jobs were in short supply, a view held by more than nine in 10 Jamaicans, the report revealed.
Income declines were expected by 23 per cent down with "record numbers" reporting spending all their remittance, especially on utilities.
Just 16 per cent expected job prospects to improve during the year ahead, down from the 19 per cent of the previous quarter, with 59 per cent expecting worsening job prospects going forward, up from the 55 per cent that expected worsening prospects in the last quarter.
Purchasing plans, however, inched up. While home-buying plans remained at the seven per cent previously reported, vehicle-buying intentions improved to 14 per cent up, from the previous quarter's 10 per cent.
Twenty-seven per cent of consumers plan to spend on vacations, an improvement over the 22 per cent of the previous quarter.
"It is a pretty dismal picture as far as the consumer is concerned because it clearly points to the situation where the consumer doesn't feel they are in fact, at the moment, benefiting from any positives that the economy is showing. They don't see it, they don't feel it, and they are echoing it in the data," Anderson said.