Confidence declines! Businesses, consumers impatient with pace of growth
Businesses and consumers are becoming increasingly impatient about the slow progress on economic policy goals and the concomitant sluggish pace of growth, even though they view the fiscal policies being pursued by the Government as the best hope for restoring the country to good health.
Optimism among Jamaica's firms was much weaker in the third quarter survey of business confidence, resulting in the index slipping to 110.6 from 128.2 in the second quarter. It was only marginally below 112.1 in last year's third quarter.
Consumer confidence during the quarter under review was 103.9, down from 114 in the second quarter this year, but remained more positive than last year's 97.8, according to data released by the Jamaica Conference Board on Tuesday.
"We need to note, based on the July 2015 survey, that there is a general confirmation that the economy is on the right path, but there is no gainsaying that consumers are being impatient in the expectation that the significant sacrifices they are being forced to make will be worth it in the end," said managing director of Market Research Services, Don Anderson.
"For the firms, it is a continuation of the belief that the Government is pursuing the right policies. Because companies are in it for the long haul they appear to be more patient," Anderson said at the release of the data.
Among firms, most of the loss was concentrated in the current business conditions index which plunged to 115.9 from 152.5 in the second quarter and 130.6 in last year's third quarter.
Noting that the business expectations index posted a more modest decline to 108.5 from 118.6 in the second quarter, Anderson said that despite slower progress than most anticipated, their expected profitability during the year ahead was one measure that remained at quite favourable levels.
"Continued economic progress, as well as the Government's steadfast commitment to the new policies, is essential to prevent the recently heightened concern from undermining support to complete this difficult economic transition," said the survey report.
The third quarter study found that 44 per cent of all firms reported that it was a good time to expand their productive capacity to take advantage of future opportunities, well below the 62 per cent in the second quarter of 2015 and the lowest level in two years.
Consumer confidence eased off the higher levels recorded in the first half of 2015 as they became more concerned about the few jobs produced by the slow rate of growth in the country.
The findings of the survey indicate that consumers' patience for increasing costs without economic benefits has been increasingly stretched, thereby mimicking the impatience of businesses.
Anderson suggested that while the survey did not explore the rationale for the uneasiness outside of its findings, anecdotally there appears to be a connection as regards the muster towards a general election.
In the most recent survey, consumers were found to be more pessimistic about recent changes in the economy, with 40 per cent having felt that it weakened in the past year, and 43 per cent expecting it to weaken in the year ahead.
Less than one per cent of consumers believed that jobs were plentiful, and 86 per cent reported that they were in short supply. Of those respondents, 53 per cent believed there would be slower job growth, up from 49 per cent in the second quarter this year.
Anderson went on to note that despite politicians' promises of jobs consumers have never - in the more than 14 years since the surveys have been conducted in Jamaica - being highly confident that they would be provided with the level of employment expected.
The Jamaica Conference Board is the research arm of the Jamaica Chamber of Commerce. The third quarter survey was conducted between July and September this year. The sample included 600 households and 100 businesses.