Business optimism in the second quarter of 2010 jumped to levels not seen since the third quarter of 2008 while consumer confidence climbed back to levels held in the last quarter of 2009.

“The increase in confidence came despite the expectation of widespread economic hardship in the year ahead and prior to the arrest of (Christopher ‘Dudus’) Coke,” said University of Michigan professor and survey team head, Richard Curtin.

The survey ran up to June 20, while Coke was arrested on June 22.

According to the Jamaica Chamber of Commerce’s Conference Board, the Index of Business Confidence was 114.0 in the secondnd quarter 2010 survey, up from 99.0 in the prior quarter while the Index of Consumer Confidence rose to 102.1 — the same reading as in the fourth quarter 2009 — up from 90.8 in the first quarter.

“Firms recognise that they now face the best opportunity in years to improve economic and social conditions to the advantage of all Jamaicans”, said the release issued by the Conference Board yesterday. “Ongoing changes in government economic policies in response to the IMF as well as the easing of the global recession has convinced firms, especially larger firms, that the economy is headed in the right direction–even if it still has a long way to go before they would consider overall economic conditions favourable.”

The readings for the review period showed that expected change in the economy was the highest since the third quarter of 2007, when the Jamaica Labour Party (JLP) took over the administration of the Government, while firms were more optimistic about opportunities to profit from investments for the expansion of their businesses and a higher number of firms expected financial balance sheets to improve.

Among all firms, 52 per cent expected the economy to improve during the year ahead, up from just 34 per cent in the first quarter of 2010 and the largest proportion ever recorded.

“This surge in optimism was in part due to the depth of the recession, in part to their favourable responses to economic policies, and in part due to ongoing improvements in the global economy,” said JCC’s statement. ” While firms were enthusiastic about recent changes in government policies, they couched their expectations based on no backsliding.”

Positive investment plans were cited by 41 per cent of firms — the highest level in a year and a half — while an improving financial balance sheet was expected by 49 per cent of all firms in the second and just 11 per cemt expected their balance sheet to worsen — the lowest percentage recorded in two years.

“It should be no surprise that planned investments in plant and equipment are now higher than the average levels during the past decade, and these gains indicate the strength of business firms underlying optimism about prospects for the Jamaican economy,” added the JCC statement.

Firms still held an unfavourable view of current economic conditions and continued to put greater emphasis on exports given the negative impact economic policies have had on the disposable incomes of domestic customers.

The overall level of confidence remained low due to the persistent uncertainty about the full impact of domestic policies on the economy while current income expectations are still the worst in seven years and the current availability of jobs remained the bleakest ever recorded for the third consecutive quarter as more than nine-in-ten consumers reported that jobs were scarce and hard to get, despite mild improvement recorded for income and job prospects.

The marginal gain to the consumer confidence index reflected greater optimism about future economic trends, which improved 17.3 per cent, while assessments of current conditions declined by 2.6 per cent and stayed close to record lows for the third consecutive quarter.

“Although current conditions in the Jamaican economy are still judged quite negatively,

consumers have switched from anticipation additional declines to expecting some improvement during the year ahead,” said the survey report on consumer confidence. “The longer term outlook for Jamaica, however, is now much more promising as the government continues to rationalise its fiscal and monetary policies as well as lowering the drag from crime and corruption.”

This did not translate into significan improvement to average spending plans, as the small increases in the past two quarters were not enough to boost planned spending above year-earlier levels.

“Home buying plans were reported by 10 per cent, down from 12 per cent a year ago. Planned vacations rose to 32 per cent, but below the peak of 38 per cent recorded one year ago. Purchase plans for vehicles were reported by 18 per cent, up slightly from 17 per cent a year ago,” added the report.