Falling consumer confidence could hurt spending patterns, pollster warns
Business and consumer confidence remain at an eleven-year high, but consumer spending patterns appear to be taking a different trajectory in what pollster Don Anderson sees a potential worrisome development.
He notes that the issue, alongside a slight difference in economic outlook on the part of consumers and businesses, need closer examination.
"None of them in them is a critical factor, but when we recognise that when we convey the point that for both businesses and for consumers, there has been an almost equal fall-off in confidence; we need to begin to reflect upon the situation from that perspective," said Anderson, managing director of Market Research Services as he presented the results of the first quarter confidence surveys on Tuesday on behalf of the Jamaica Conference Board.
For the quarter, business confidence dipped by four points or two per cent, while pessimism among consumers was more pronounced, leading to a 13-point or eight per cent drop in confidence.
The Index of Consumer Confidence closed the quarter at 138.7 points, down from 151.6 points a year ago. The Index of Business Confidence fell from dropped from 142 points to 139.3 points.
The pollster said that while the change for the business community is pointing to stable optimism, the same could not be said for consumers, whose survey responses he characterised as "probably a little knee-jerk in terms of their reaction to what is happening in the economy or what they perceived to be happening".
Still, he cautioned that their reactions should not be ignored.
EXPECTATIONS NOT MET
Anderson noted that over the last five quarters, confidence has remained high but that post-election deliverables by the current administration appeared, based on consumer responses, not to have lived up to their expectations.
"The consumers are perhaps beginning to lose patience with the pace at which their expectations are being realised," said Anderson. He added that the second-quarter results would give a better read on this assessment.
In relation to spending patterns, Anderson said that unlike previous quarters, the survey shows consumers contracting their plans for spending on major items, vacations and everyday buying decisions.
The same number of persons are receiving remittances, but a larger portion of them say they are getting less in terms of value.
Anderson sees the fall in consumer spending patterns as troublesome.
"That did not happen in 2016, but the fact is that consumers have been waiting for the realisation of jobs, certainly in the tourism sector and in the construction sector, and the indications are from that fall-off in the first quarter of 2017 that perhaps they are saying, 'well we're waiting, but we're not seeing it coming'," he said.
He noted that consumers are also less optimistic about their income expectations, a change from previous quarters when there was a certain level of buoyancy which characterised the outlook of the average Jamaican.
Initially, "They said: 'Yes, jobs are going to come on stream and we will get some of it. We are going to participate in the growing of the economy and benefits will accrue to us'," said Anderson. "What they are now saying is that we're not so sure."
In the meantime, economic confidence among Jamaican firms has remained largely unchanged during the past five quarters. Businesses reported robust investment plans in new plant and equipment, Anderson said.