Roller coaster ride
Business, consumer confidence down againWednesday, October 27, 2021
Businesses' and consumers' confidence in the economy continues its roller-coaster ride, as the indices declined to 121.7 points and 129.2 points, respectively, in the third quarter (Q3) of 2021.
Pollster Don Anderson, in presenting the latest findings of the Jamaica Chamber of Commerce business and consumer confidence indices yesterday, indicated that despite businesses upward surge in the previous quarter, the movement in this index continues to fluctuate, a trend which commenced since the second quarter (Q2) of 2020.
Businesses remain uncertain about future business as the index this quarter reported a dip to 120.6 points, 3.4 per cent lower than Q2 of 2021. This fluctuating trend, Anderson said, is a clear indication of the uncertainty of the future among proprietors.
Firms' optimism about current business conditions have dropped by approximately 14.6 per cent from 146.0 points to 124.7 points in the quarter under review.
He pointed out that while fewer firms expect the economy and or the financial standing of their firms to improve over the next 12 months, the proportion of firms that expect profitability to improve or remains the same, remains stable.
“Again we ask the question whether this is a hope, rather than a realistic expectations on the part of the businesses. Now we're not accustomed to seeing businesses think like consumers but against the background of the kind of negative indices that we're seeing, businesses are still optimistic that their return on investments would at least be as it was previously, and so in fact their profits will be the same as last time. Which is a little bit strange against the perception that the economic climate may change significantly positively over the next 12 months,” he contended.
Correspondingly, firms are still making plans for the Christmas season. Approximately 46 per cent intend to pay bonuses to their staff — “no matter how small”, while other major plans include annual Christmas party/staff treat (29 per cent), customer tokens/gifts (27 per cent) and donation for charity (24 per cent).
Likewise, consumers' optimism about current economic conditions dipped by 2.4 per cent points down from 146.2 points in the previous quarter to 142.7 points.
The proportion of consumers who believe that business conditions are good has decreased from approximately to 12 per cent to 10 per cent while the proportion who believe jobs are plentiful has remained stable — 5.2 per cent in Q2 compared to the 5.9 per cent in Q3.
“It should be recalled that the upward movement in [expected economic conditions] was due to the promise of positive changes due to the reopening of businesses. It would appear however that that consumers' expectations for the reopening were not met as the index decreased to close to where it was at the start of the year when optimism was at its lowest in two years,” the report stated.
Additionally, salary cut (26 per cent) and job losses (18 per cent) were reported as the most widespread impact of the novel coronavirus pandemic among consumers.
Interestingly, while the majority of consumers do not anticipate purchasing either a home or a car in the year ahead, those who anticipate purchasing a home have grown consistently over the last four quarters from 6.3 per cent in Q3 2020 to 10.6 per cent in Q3 of 2021.