Consumer, business confidence re-emerging
Consumers and businesses were more confident about economic prospects in the second quarter of 2021 when compared to the prior quarter, but optimism among both groups still lags pre-pandemic levels.
The business confidence index increased to 130.8 points in June, compared to 115.2 points in March 2021 and 115.4 points in June 2020. Consumer confidence increased to 149.8 points from 120.7 points in March 2021 and but remained below the 165.2 points recorded in June 2020.
“Confidence has shot up, but it is not at pre-COVID-19 levels,” said Managing Director of Market Research Services, Don Anderson, in his quarterly address of the Confidence Indices on Tuesday. The fieldwork, which is done by Market Research Services on behalf of the Jamaica Chamber of Commerce, was conducted between April and June.
Anderson indicated that in the second quarter of 2021, slightly more than half of the respondents thought that now was a good time to invest. This compared to 35.9 per cent in the second quarter of 2020. Additionally, 30 per cent felt it was a bad time to invest, compared to 54.4 per cent in the second quarter of 2020.
“There has been an uptick,” he added. “But it does not equate to pre-COVID [levels],” he added.
Businesses felt it is a good time to invest in wholesale and retail ventures, followed by personal care, transport, storage and communications, and construction and installation. A year earlier, businesses, when asked where they would spend on capital expenditure, focused mostly on farming and mining, followed by wholesale and retail, and construction.
Anderson said that consumers are generally of the view that business conditions will get better, amounting to 43 per cent of survey respondents; 33 per cent felt that business conditions would remain the same; while 24 per cent are of the view that it will get worse.
Consumers, however, were not really optimistic about new jobs.
“They think new jobs are scarce,” he said, adding that consumers were conservative in their spending patterns as a consequence of that pessimism. Over the last five years, consumer confidence hovered at its peak in 2019 at 180.2 points, with its lowest level at some 135.3 points in 2021.
In the discussion that followed Anderson’s presentation on Tuesday, key business leaders struck an optimistic tone about future business.
Gloria Henry, president of the Global Services Association of Jamaica, indicated that the business process outsourcing, or BPO, sector, which the association represents, continues to grow because its operators offer businesses a way to save on costs.
“BPO continues to grow, at 6.5 per cent annual growth, because in times of distress companies look to outsource non-core activities,” Henry said, adding that some 60 per cent of BPO operators have new projects in the pipeline, and that nine new sites were being built across Jamaica.
Within the investment community, Managing Director of the Jamaica Stock Exchange, Marlene Street Forrest, said that the local equities market continues to recover from March 2020 lows with new listings and fresh capital.
“Future market conditions are going to improve,” Street Forrest asserted.
Sheree Martin, the head of retail banking and group client experience at National Commercial Bank Jamaica, was bullish on economic growth, while also noting that there was now more adaptability to digital platforms. “It is not new, but there are more companies on the radar these days,” she said.
Oliver Townsend, CEO of Knutsford Express, a luxury bus service, urged companies to make use of digital solutions to connect to customers.
“We think it is a time where you have to innovate, using technology for more contactless delivery,” he said.