Confidence rebounds despite scarce jobs
Business confidence recorded a significant gain in the third quarter of 2012, with most of the uptick concentrated in firms' optimism of the future prospects for Jamaica's economy and an improved outlook in their financial position.
Consumer confidence also rebounded during the period, registering the highest level since 2008.
The level of confidence was attributable to consumers' expected gains in the national economy as well as their own financial situations, rather than in how they assessed current conditions.
However, in the overall survey of firms and consumers, "the largest disappointment from the Government's new economic policies is continued scarcity of jobs," said Don Anderson, managing director of Market Research Services, at the launch of the third quarter 2012 indices in downtown Kingston yesterday.
The index of business confidence was 106.3 in the third quarter survey, up from 91.8 in the second quarter and the year-earlier figure of 95.8, while the level for consumers rose to 118.2 from 111 in the prior quarter and 104.2 in last year's third quarter.
"Other than the unsustainable surge in optimism generated by the new government in the first quarter of 2012, the level of confidence recorded ... was the highest since late 2008," said the report of the survey.
More than 50 per cent of all firms identified crime and unemployment as the top problems facing the country, sharply contrasting with a few years ago when the social and business costs of crime and violence was cited by nearly everyone, the report said.
However, businesses identified the need for a better educated workforce and reduced government regulations and favouritism as issues that reduced the potential for economic growth.
The improved optimism was recorded despite the substantial problems still facing the United States and European economies, Jamaica's most important trading partners.
"Although continued gains in business confidence are needed to insure positive GDP growth during the years ahead, the most positive news from the latest survey is that confidence among Jamaican firms has begun to stage a revival," said the report, undertaken by the Jamaica Conference Board, the research and advisory arm of the Jamaica Chamber of Commerce (JCC) and developed in collaboration with the Survey Research Centre at the University of Michigan, United States.
Just nine per cent of firms reported that returns on investments were better than they initially expected. Those that expected conditions in the national economy to worsen fell from 52 per cent in the second quarter to 46 per cent in the latest survey.
Despite the stagnant economy, 61 per cent of firms expected their balance sheets to improve in the year ahead, up from 41 per cent the previous quarter. Rising profits were expected by 53 per cent of firms, compared with 39 per cent last quarter.
Greater investment spending was planned by 35 per cent of firms, up from 31 per cent in the second quarter and 30 per cent in last year's third quarter.
Among consumers, the current employment situation remained dismal, with nearly 90 per cent of Jamaicans reporting that jobs were scarce and hard to get. When asked about job prospects for the year ahead, 26 per cent expected gains.
"The expectation that jobs would become more plentiful under the new government policies represented its primary appeal and, ultimately, the greatest disappointment," the report said.
But JCC president Francis Kennedy said the feedback from members of the business organisation was that a lot of jobs were available.
However, he indicated that potential employers were reluctant to take on persons who did not possess the requisite skills, concerned that they would have to provide training, at their expense, for at least a few years if they provide employment under those circumstances.
Anticipated income gains
The survey report said more Jamaicans anticipated income gains than at any time since 2008, with the sole exception of the unrealistic surge at the start of 2012.
Vacation plans were voiced by 28 per cent of consumers, just above last quarter's 26 per cent and 25 per cent during the corresponding period last year. Vehicle buying plans remained flat at 15 per cent.
Home buying plans increased slightly to 11 per cent from nine per cent in both the prior quarter and last year's third quarter, and remained at the bottom of the range of 11 per cent to 14 per cent in the prior three third-quarter surveys.