Anderson JAMAICAN BUSINESSES see greater financial prospects and fatter profits in the coming year, indicators that have pushed the recently released second quarter Index of Business Confidence up 2.3 points over the first quarter results, and a significant 17.6 per cent over the year prior figure.
But they are less confident of a fast paced economic recovery, and are not as willing to invest in expanding operations, says the IBC survey results released Monday.
According to American Professor Richard Curtin, businesses across the spectrum of small to large corporations, are healthier because they are keeping tighter rein on operational expenses such as staff costs.
More businesses are reporting improved returns on investment, and 65 per cent say they expect larger profits.
"They have come to see the economy in terms of productive growth and controlled costs, said Curtin, speaking with Wednesday Business on Monday. "Employment costs are seen as a critical factor to success."
But more efficient cost management, coupled with a four per cent fall off in companies willing to invest in expansion to 39 per cent, are happening at the expense of job creation.
Consumers see less hope for new jobs emerging this year, and even expect that the current job market will shrink further, stripping the second quarter Index of Consumer Confidence down 7.3 points to 107.8, compared with the Q1 results. The ICC is still 7.8 per cent higher when compared to the Q2 results in 2001.
Like firms, consumers see continued economic recovery albeit at a slowed paced, but are less confident that their lives will be the better for it.
"They have a different outlook because they are so dependent on jobs," said Curtin. "Ninety per cent of families say jobs are in short supply." The current expectations for jobs have sunk, and consumers also anticipate that their standard of living will worsen during the year based on anticipated price hikes. Of the numbers surveyed, 57 per cent thought business conditions would improve, down from the 66 per cent recorded in Q1.
"The anticipated slowdown was just enough to convince consumers that jobs will remain scarce," said the survey. But they see a glimmer of hope for new employment next year. According to Curtin, this optimism is manifested more in the tourism resorts than in the capital Kingston, based on expectations that the tourist industry will begin showing signs of recovery later this year.
The Kingston workforce cite crime as a deterrent to improved prospects. Overall 55 per cent expect unemployment levels to rise, up 5 per cent over Q1, but down from the year prior figure of 64 per cent.
Despite the lack of jobs, the consumer survey showed little change in intent to purchase, with fractionally more people indicating plans to buy cars, up two per cent to 13 per cent, and vacations, up one per cent to 27 per cent, while the numbers intending to buy homes remained unchanged at 7 per cent.
"Both businesses and consumers are more optimistic than last year," said Curtin.
The consumer and business indices, both a year old, are published by the Jamaica Conference Board. The analyses are done by Professor Curtin, head of the Survey Research Centre at the University of Michigan. The polling is done by Don Anderson's Marketing Research Services.
