Date: July 10,2018
Today, The Jamaica Chamber of Commerce announced the results of the 2018 2nd Quarter Business and Consumer Confidence Indices today at the JCC Secretariat. The presentation was led by Mr. Don Anderson – Managing Director, Market Research Services Ltd.
Business Confidence Index
According to the Survey of Business Confidence Second Quarter 2018 Summary Report, The Business Confidence index increased to 140.4 points, up from 136.5 points recorded in Q1 2018 and the 5th highest since surveys started in 2001. The main drivers for such growth lies within the expectations for economic growth, as this index increased from 125.8 points to 132.0 points.
Firms are of the view that the economy is moving in the right direction and this has convinced them of future growth. In fact, the proportion of firms that expected an improved economy increased by 16% points from 48% in the 1st quarter to 64% in the 2nd quarter, 10% points higher than the average in 2017.
This increased optimism about future economic prospects has translated to firms expecting stability in their future business conditions. When asked to assess their firm’s financial prospects, 70% expected gains in the year ahead while 65% expected improvements in the profitability of their firm. This represents a change of 0% and +6% points respectively since the 1st quarter.
Thus far, survey suggested that the proportion of firms with profits exceeding expectations was 18% in the 2nd quarter, relatively flat from the 17% recorded in 1st quarter. Also, just over half of the firms surveyed (55%) reported that their 2018 goals are on the way to being realized but not fully on target or as planned. Just less that three in every ten firms surveyed, 28% were fully on target with the goals set for 2018.
However, when asked about the firm’s willingness to invest in new plant and equipment, this dipped marginally to 137 points down from 140 points in 1st quarter of 2018. However the large majority, 65%, continued to agree that the time was right for expansion, exceeding the 58% average in the year 2017. Crime and its associated cost were cited as the number one risk factor to business investment.
Consumer Confidence Index
This optimism continued on its upward trajectory, as Consumer confidence also increased for the 2nd quarter of 2018. The Consumer Confidence index was 159.1 points for the 2nd quarter compared to the 156.4 points in the 1st quarter, as consumers’ optimism increased about current and future business conditions.
Though consumers’ confidence in business and job prospects increased, they were however not as confident that such benefits will be trickled down to them. This was evident in income expectations declining. Income gains were anticipated by 45% in the 2nd quarter, down from 53% in the 1st quarter of 2018. Notably, 39% of these consumers received remittances, where year-to date, the average percentage receipt of remittances started an upward climb from 36% in 2017 to 37% so far in 2018.
Consumers’ optimism was also observed in their assessments of current economic conditions, as this index grew by 9 points to 179.5 points up from 170.8 points reported in the 1st quarter in 2018. Their expectations for the future however remained unchanged at 152 points, as improved year-ahead outlook for the economy was expected by 33%, a marginal improvement from 31% reported in the 1st quarter. Consumers with positive views of the economy remained optimistic and confidence in the Government’s efforts and their perceptions of the current and/or future availability of jobs.
It is however important to note that though jobs are perceived to become available in the future by consumers (37%), this is relatively at a low level, indicating the general population does not share this believe. In fact, the percentage of consumers who expected a worsening of the economy was 33%, creating a balance between optimism and pessimism.
However, despite consumers’ optimism about current business and economic conditions, they did not anticipate a change in their finances.
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