Business

Businesses, consumers a little less pessimistic

BY STEVEN JACKSON Business reporter jacksons@jamaicaobserver.com

Friday, January 24, 2014    

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BUSINESS and consumer confidence inched up in the last quarter of 2013 from record lows three months before.

However, current job prospects dipped to a record low, while devaluation trumped crime as a major concern.

"There was a minor rebound in consumer and business expectations from record lows... rather than a resurgence of optimism, the shift can best be described as a lessening of pessimism," indicated head of the Survey Research Centre at the US- based University of Michigan, Professor Richard Curtin at the NCB Wellness Centre in Kingston yesterday.

In a perfectly confident society, the Business and Consumer confidence Indices Survey, which is released quarterly by the Jamaica Conference Board of the Jamaica Chamber of Commerce, would score 200, according to Curtin.

The latest survey returned indices for business and consumer confidence at 98.2 and 94.6, respectively for the December quarter. In the September quarter they stood at 84.1 and 86.7 respectively.

"The top concerns are the impact of devaluation and the lacklustre growth in domestic demand," Curtin said of businesses. "Devaluation makes the cost of new investments more expensive if they require imported materials, and make the revenue potential from domestic sales less certain."

Despite these concerns he attributed the slight rebound to slightly better expectations.

"The initial shift commonly occurs before people become convinced that better times are forthcoming," the research team head said. "The improvement occurred in every component save one: Firms thought that their profits during the past year had continued to weaken."

Specifically, profits were at a "record low" but investment plans surged to 101, up from 77, three months prior, and 81, 12 months before.

"Indeed the willingness for firms to increase their investments indicates a strong entrepreneurial spirit," Curtin said, adding later that "a record number of firms expressed their intent to increase investment spending in the year ahead so that they could more fully take advantage of the economic opportunities they now faced."

He added that those surveyed generally agreed with the current economic policy characterised by an International Monetary Fund (IMF) agreement.

The findings also pointed out that nearly one in three households expected rising living standards notwithstanding poor job prospects.

"The current job situation was judged less favourably than ever before," he explained. "It is a nearly universal view that jobs were scarce and hard to get (held by 93 per cent). Less than one per cent of all consumers thought jobs were now plentiful."

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