With the COVID-19 pandemic weighing on the local economy, causing social disruptions and shutdowns across sectors, consumer and business confidence took a knock during the first and second quarters of the year. This was according to the latest findings of the Jamaica Chamber of Commerce (JCC) business and consumer confidence indices.

The consumer confidence index revealed a downward trend over the last two quarters moving from 180.1 points in quarter four of 2019 to 172.9 and 165.2 points in the first and second quarters of 2020 respectively.

According to pollster Don Anderson, who presented the findings yesterday via Zoom and YouTube live stream, these indices are relatively high considering the lowest ever recorded was 82.7 in the second quarter of 2003.

Consumer confidence in current economic conditions fell below 200 points to 135.4 points in the second quarter for the first time over eight quarters. Consumers’ assessment of the current business conditions also moved downwards from 111 points in the fourth quarter of 2019 to 105 and 82 points in the first and second quarter of 2020 respectively.

The results also indicated that the most common impacts of COVID-19 among consumers were job loss, reduced income and movement restrictions. The current job index dropped from 62 points in quarter one to 25 points in quarter two.

Thirty-one per cent of consumers in the second quarter compared to 15 per cent in the first quarter expressed the view that business conditions were bad in the country at the time of the survey.

However, despite these findings, Anderson contented that consumers remain optimistic about the future as expectations for the economy revealed an upward movement in the index from 159.8 points in the first quarter to 175.2 in the second quarter of 2020.

The index of future business conditions recorded the highest in the history of these surveys with 148 index points, while consumers’ expectations are high for future jobs with the index reaching its peak at 139 points in the second quarter of 2020.

The top two survival strategies during COVID-19 are starting a new business and looking for a new job. Consumers who intend to start up a business will fund such activity primarily from their own savings (35 per cent) but many will also be looking to the financial institutions for a loan (25 per cent). Support from family and the community partner plans were equally mentioned (13 per cent).

When asked to indicate the most important thing the Government should focus on, consumers rated controlling the spread of the virus, the health of the people including health education, opening of the economy/businesses and job losses due to the pandemic.

BUSINESS CONFIDENCE REACHES ITS LOWEST SINCE 2015

Optimism among businesses recorded a steady downward trend with 115.4 index points in the second quarter of 2019 — the lowest recorded since the third quarter of 2015.

Concerns around the climate for investment/expansion, as well as the performance in firms’ profitability being worse than expected are the main drivers of this decline. While these concerns are consistent with those expressed in the fourth quarter of 2019, the extent of the concern was amplified due to the effects of the COVID-19 pandemic.

Sixty-eight per cent of businesses reported loss in revenue as a change they experienced due to COVID-19. This was followed by changes to staff (52 per cent), including layoffs, reduction in staff hours, and/or salary cuts. Farming/agriculture, tourism and construction and installation were the industries that mostly reduced staff.

Concurrently, businesses expect a bright future for the economy despite the global pandemic. These expectations are driven by three main factors — the anticipation that businesses will be opened up fully within the next 12 months, learnings from the effective management of a crisis, as well as expectations for a steady flow of tourist into the country following the pandemic.

Approximately 49 per cent of firms interviewed are optimistic that their business will survive the effects of COVID-19, the remaining were of the view that they would likely survive the virus, while others did not know what the fate of the business will be after COVID-19. While most firms (64 per cent), expect an improvement in their financial standing in the next 12 months, they do not expect this to translate into increased profits. The large majority of firms (76 per cent) anticipate recovery within the short term — that is, 1 to 3 years, 18 per cent anticipate recovery within less than one year.

Conducted by Market Research Services, the index is derived from quarterly surveys, of CEOs and senior officers of approximately 100 Jamaican firms, and 600 consumers islandwide, on business and consumer opinions related to current conditions and future expectations of the economy.