As business confidence dips, consumers grow more optimistic
Business confidence dipped marginally during the first quarter of 2018, while consumers' optimism rose despite the majority believing that job prospects continue to be elusive and remained doubtful about future employment.
Despite the fall-off in business confidence, because of the increase in consumer confidence overall the indices in one percentage point above what it was in the last quarter of 2017, according to the report of the survey.
Businesses' expectations for the economy also dipped slightly, but investment plans remain robust, and there is optimism in the financial outlook, said managing director of Market Research Services, Don Anderson, at the release of the report by the JCC Jamaica Conference Board.
"Profits were down, but it is in line with what they expected. In the previous quarters, there was an indication that profits exceeded expectations. In this particular quarter, because of the fallback, they are now saying profits are in line with expectations," said Anderson.
The business confidence index dipped to 136.5 points during the review period, just below the 2017 year average of 138.6 points, which Anderson said was too small to consider it an established change in business sentiment and should instead be considered a normalising of confidence.
"Despite the falloff, there is a clear indication that businesses are very bullish about investment," he said.
A majority of firms, 53 per cent, expected that there would be no change in taxes over the next year, while 38 per cent expect an increase. Some 40 per cent of businesses want to inject more capital into their businesses, 26 per cent want to invest in human resources, and a similar percentage have no plan for investment.
NOT SEEING JOBS
For consumers, although they are optimistic about the economy, "there is ambivalence about future jobs," said the pollster. "On the one hand, they are saying that it looks like there is going to be growth, but they are also saying at the same time they are not seeing the jobs that will make a difference in their lives," he said.
For the review quarter, the consumer index was 156.4, higher than it has been over the last year, having moved from 148 in the fourth quarter of 2017.
The increase in the index is more pronounced for consumers in the Kingston region than in tourism and other areas, a reversal of the trend found in previous studies, Anderson said.
"To a large extent they are feeding on the promise, and the clear realisation that the BPO [business process outsourcing] and construction sectors will generate thousands of new jobs," he explained. "Consumers also expect business conditions to improve. They also show some level of confidence that jobs are going to become available, but the large majority of individuals are very doubtful that they will be able to find jobs."
Anderson also noted that while lots of houses are being constructed, the survey found that there is no increase in the level of home-buying intention, which remained flat 12 per cent. However, 16 per cent expressed interest in acquiring a vehicle, up from 14 per cent.
"So while consumers are saying they believe more jobs are going to become available , the trickle-down effect has not really begun to manifest itself," he said.
"Despite all that, consumers are saying, despite a greater level of optimism, this does not mean they are in a really better position to do what they would like to do."