By Andrew Green, Staff ReporterLOCAL BUSINESS and consumer confidence in the economy fell to a new low during the second quarter of the year ended June, according to the latest Jamaica Conference Board survey.
Uncertainty in the business community is feeding into uncertainty among consumers, said Professor Richard Curtin, head of the University of Michigan Survey Research Centre. Professor Curtin, who designed the survey, presented the findings at the Terra Nova Hotel in Kingston yesterday.
"The overall level of business confidence continues to weaken," Professor Curtin said. "Most businesses think the worst is over, but they do not yet see robust growth in the near term."
From a base of 100 in the second quarter of 2001, the Index of Business Confidence peaked at 117.7 in the third quarter of 2002. There has been a rapid slide since, down to its present low of 80.5.
"The concerns of business have been about devaluation, government policies and weakness in the global economy," Professor Curtin said. "These will continue hamper growth in the year ahead."
Nearly half of all businesses reported that the current return on their investment was worse than they expected. The tough conditions are also expected to continue with two-thirds of all firms reporting that they expected conditions to worsen.
The survey was carried out from the middle of May to the Middle of June, said Don Anderson, head of Market Research Services Ltd. This was in the immediate post-Budget period when many were smarting from the announcement of new cess on imports, ad-justments in General Consump-tion Tax and the devaluation of the local currency.
Market Research Services conducted the survey on behalf of the Jamaica Con-ference Board. By measuring business and consumer perceptions, such surveys can predict future economic behaviour as these perceptions are acted upon.
And as businesses confidence fell, so did that of consumers.
think the economy has worsened," Professor Curtin said. Faced as firms are with difficult circumstances, consumers believe they will "throttle back" their expansion, with direct implications for employees .
Most consumers think jobs are scarce and hard to get and this is affecting their spending plans, Professor Curtin said. With a view that they will have smaller income gains and larger price increases, consumers are cutting back on plans to buy houses, vehicles and vacations.
"Consumers are less willing to make bigger discretionary purchases of in the year ahead," Professor Curtin said. "These are all quite negative findings, but I want to emphasise that what we see is a turning point that many businesses expect," the professor said. The current scenario suggests an economy which is at the low point in the business cycle.
Cabinet Secretary, Dr. Carlton Davis, who attended the survey presentation, said the positive performance of the Jamaican economy was not reflected in the survey.
But Mr. Anderson said the performance of major sectors such as tourism, bauxite and the sugar industry did not necessarily show up immediately in the well being of consumers or the broader business community.
Of even greater concern is that, "the survey is designed to tell you what will happen in the economy," Professor Curtin said of the gloomy conclusions. "That is what is disturbing about the results."
