Business and consumer confidence reached all-time highs for the last quarter of 2015, largely due to the convergence of three main areas — the upcoming Christmas season, the belief that elections were near and the sharp fall in the price of oil on the international market.
The average level of confidence for both groups in 2015 “represents the highest in 15 years”, said Don Anderson, managing director of Market Research Services, in his presentation of the Jamaica Conference Board's fourth quarter 2015 businesss and consumer confidence indices on Wednesday.
Confidence usually improves at Christmastime for both businesses and consumers, at the prospect of increased remittances and spending, Anderson said.
Confidence also increases when elections are in the air. “In an election period there is generally a certain amount of buoyancy that tapes off nine months later,” Anderson said. “It is very likely that within the next three months we will be faced with an election.”
The Christmas period twinned with the election period created “a double whammy” effect, Anderson said.
But it is perhaps the low price of oil — now selling for less than US$30 per barrel — which most affected confidence, especially for the business sector. The highest percentage of businesses in 15 years expected their finances to improve in the upcoming year, Anderson said, largely because of oil.
Businesses are still cautious for the future, however. “They don't know how long the boom from low oil prices will last,” Anderson said. “They are bullish for prospects for their business, but less strong for the economy going forward.”
Meanwhile, more consumers feel that job prospects are improved, though they are still in the minority. “Only 24 per cent feel job prospects are going to be better,” Anderson said. That may not be high, but it's still “the highest recorded over 15 years'', he said.
Consumers also reported receiving larger amounts of remittances — both in US and Jamaican dollar terms.
Consumers are “buoyant” about their prospects, Anderson said, with more people planning on buying a home (11 per cent, up from seven per cent a year ago), buying a car (16 per cent, up from 11 per cent) or taking a vacation (37 per cent, up from 27 per cent) in the year ahead.
The survey started in 2001 and has now been running for 15 consecutive years. It surveyed 600 consumers from across the island and in every parish, as well as 100 businesses in different industries, Anderson said.