Business optimism downFriday, November 16, 2012
BY CAMILO THAME Business Co-ordinator email@example.com
OPTIMISM over business conditions now and in the future has fallen, by STATIN's reckoning.
The Statistical Institute of Jamaica, which conducts regular surveys for the Bank of Jamaica, reported that business persons viewed current and future business conditions less favourably than a year ago.
Individuals viewed their business as being better off than year-earlier levels for most of 2011 and this year, but at least since September, they have held an opposing view.
Moreover, their expectations for business conditions a year ahead has been worsening.
In October, when the indices for present and future business conditions fell by 20.3 per cent and 8.5 per cent year over year, respectively, the outturn reflected a trend decline which has persisted since December 2010, according to the survey report.
"The negative perception of economic conditions coincides with the current uncertainty surrounding the timing of an agreement with the IMF on Jamaica's medium-term economic programme," according to the BOJ's latest Quarterly Monetary Policy Report.
Importantly, the general uncertainty in the economy associated with concerns about the delay has negatively affected private investment.
The performance of private investment was deduced from an estimated decline of 5.9 per cent in capital goods imports relative to the September 2011 quarter.
Fifty-five per cent of respondents continued to indicate that they expect the largest increase in their production costs in the 12 months after October to reflect higher cost of utilities, according to the survey report.
Fuel and transport costs were identified by 16.3 per cent of the individuals surveyed to be the biggest contributor, while 15.6 per cent thought stock replacement would see the biggest price increases.
The BOJ's report comes after the Jamaica Chamber of Commerce's (JCC's) business confidence survey showed greater optimism in the September quarter.
Business persons believed that current business conditions were slightly better than during the third quarter of 2011, and the index of business expectations surged upwards by 15.4 per cent year over year.
"The most positive news from the latest survey is that confidence among Jamaican firms has begun to stage a revival," said a release from the JCC.
Even though the BOJ deduced that current private investment has fallen, the JCC's survey showed that greater investment spending was planned by 35 per cent of all firms in the third quarter of 2012, up from 30 per cent in last year's third quarter.
On the other hand, planned investments have been higher in most of the JCC surveys conducted in the past decade.
"One reason is that firms have reported dismal current returns on past investments," said the JCC release. "Returns on past investments represent a major source of funds that firms use to finance future expansion, and these returns have recently been unusually low."
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